The USD is higher ahead of the FOMC rate decision and after the BOJ rate decision overnight. IN the video above, I take a technical look at the 3 major currency pairs to kickstart the US/North American session where the greenback is higher, stocks are modestly higher (after declines yesterday) and US yields are higher.

BOJ Governor Ueda stated that Japan’s economy is recovering moderately but still has some weaknesses, with high uncertainties from economic conditions, prices, and global trade policies. He highlighted the growing impact of FX movements and firms' stronger focus on wage and price hikes. The BOJ will adjust easing measures as needed to achieve its price target sustainably.

Ueda noted that spring wage negotiations align with BOJ’s January view, with strong wage momentum spreading to smaller firms. He acknowledged that rising prices are negatively affecting households but emphasized monitoring wage trends carefully. While underlying inflation remains below 2%, there are risks of price overshooting, and household inflation expectations could shift.

Ueda also addressed uncertainties regarding U.S. trade policies, particularly tariffs, which have expanded rapidly. The BOJ will scrutinize their impact on the global and Japanese economies. He reaffirmed that the pace of future rate hikes will depend on data, with a review expected by early April, and did not rule out reconsidering the inflation target in the future.

The Fed will be next as they announce its rate decision at 2 PM followed by the Fed Chair press conference at 2:30 PM ET. The Fed is expected to hold interest rates steady with the market focused on any hints to its policy due to growing inflation risks from potential trade tariffs OR from a slowing economy. Tariffs could drive up prices while slowing economic growth, placing the Fed in a difficult position—tightening to control inflation or loosening to support employment.

Consumer sentiment has weakened amid concerns over market instability and government job reductions. Officials are particularly wary of inflation expectations, as consumer sentiment can reinforce price trends.

With uncertainty high, the Fed is likely to remain in a wait-and-see mode. The last dot plot put the number of Fed cuts at 2 for 2025. The newest guesstimates will be released today along with the Fed's projections for GDP, Unemployment and for inflation.

In December the projections saw GDP at 2.1%, Unemployment at 4.3%, PCE headline inflation at 2.5% and core also at 2.5%. The estimate for Fed Funds average was at 3.9% vs 4.4% currently.

PS Muddying the water ahead of the meeting is the Trump firing of high level FTC commisioners late yesterday. The move runs counter to current Supreme Court precedent that says the FTC’s commissioners can only be removed for cause. The question is "Is this a prelude to the firing of Fed officials?" who enjoy (presumingly), the same neutrality. Trump manages by intimidation. The firing just ahead of the rate decision is a curious, and purposeful decision. Trump officials including his Treasury Secretary has been laying the foundation for slower growth ahead and Trump in the past has not ruled out the possibility of a recession. Stocks moving lower despite efforts for peace are likely bothersome as well.

US MBA mortgage applications for the week ending March 14, 2025, declined by 6.2%, reversing part of the prior week's 11.2% gain. The market index fell to 252.5 from 269.3, while the purchase index remained relatively steady at 154.7 versus 154.6 previously. However, the refinance index saw a notable drop to 794.4 from 911.3, indicating weaker refinancing activity. Meanwhile, the average 30-year mortgage rate inched higher to 6.72% from 6.67%, reflecting continued pressure on borrowing costs.

A snapshot of the US stocks market is showing moderately higher levels in premarket trading after declines yesterday:

  • Dow industrial average +6.69 points. Yesterday, the index fell -260.32 points or -0.62%
  • S&P index +13.09 points. Yesterday the index fell -60.46 points or -1.07%
  • NASDAQ index +68 points. Yesterday the index fell -304.55 or -1.71%

In the European equity markets, indices are mixed :

  • German Dax -0.60%
  • France's CAC +0.16%
  • UK's FTSE 100 -0.24%
  • Spain's Ibex -0.13%
  • Italy's FTSE MIB unchanged

In the US debt market, yields are higher. The yesterday the US treasury auctioned off $13 billion of 20 year bonds with stellar demand from both international and domestic buyers:

  • 2- year 4.054%, +1.2 basis points
  • 5-year 4.089%, +1.9 basis points
  • 10 year 4.294%, +1.3 basis points
  • 30 year 4.591%, +1.3 basis points

In other markets:

  • Crude oil is trading near unchanged at $66.75 after falling yesterday on peace hopes in Russia/Ukraine. Today the the cease-fire agreement of energy and infrastructure seems already to have been broken. Ukraine's Zelenskyy is expected to speak to Pres. Trump. The oil inventory data will be released later today. Thr private data released late yesterday showed:
Oil
  • Gold is trading up $5.06 or 0.17% at $3039.80. A new record high at $3045.34 dollars was made in trading today
  • Bitcoin is trading higher by $1065 and $83,770.
Source: Forex Live