Fed’s aftermath: USD higher, equities lower – Rabobank

By FXStreet FXStreet (Delhi) – Michael Every, Research Analyst at Rabobank, notes that yesterday Asia seemed to largely take the Fed’s rate hike in its stride.

Key Quotes

“That being said, things have started to look less rosy back in the US itself, where 2-year yields dipped back below 1.00% (and were 2bp lower at 0.98% this morning in Hong Kong time) while 10-year yields dropped 6bp to 2.22%, showing no signs of an imminent break-out to the upside even though we are – ostensibly – around three months away from the next Fed hike if we believe the FOMC’s own expectations. Moreover, US equities reversed course, the Dow -1.4% and the S&P -1.5%. Data-wise, the Philly Fed index also collapsed from 1.9 to -5.9: apart from September (which was -6.0) that is the worst reading since February 2013, making for another “Rate hikes? Really?” message from the part of the US economy still trying to actually make things. Given that the USD index jumped from 98.4 to 99.0 on the day, expect more of that to come.”

“Meanwhile, back in Asia we saw a further drop in USD/CNY to 6.4837 and in USD/CNH all the way to 6.5722. Given that the median FX …read more

Source:: FX Street