All Eyes on Fed Today

Rate hikes on schedule

The US Federal Reserve and the Bank of England will deliver their monetary policy decisions in the following days, and both might raise rates by 50 basis points. The FOMC's verdict is due later today. 

The 50 bps rate hike, the largest since 2000, has been already priced in. As described in the latest FOMC minutes, the Fed will likely declare that the balance sheet run-off will begin in mid-May with a maximum of 95 billion USD. Additionally, all attention will be on Powell's statements and tone during the post-meeting news conference. Volatility in the markets will indeed be elevated throughout his speech.

More sanctions incoming, do they work?

Today is supposed to be the day when the EU announces its sixth round of sanctions on Russia. New sanctions would target energy imports, Russian banks, and misinformation tactics. At the same time, independent refiners in China, the third-largest customer of Russian oil, have been quietly acquiring Russian oil at severe discounts, according to the Financial Times.

Apart from that, the ADP employment report is on the agenda today, expected to decline slightly to 395,000 in April, down from 455,000 in March. Moreover, the services ISM survey is due, with investors anticipating a minor improvement from 58.3 to 58.5.

USD on the rise

It looks like the uptrend in the US dollar seems unstoppable as any small dips are being instantly bought. Should the EURUSD pair drop below 1.05, we might see another leg higher in the greenback. TIn that case, the next level to watch would be at 2016 lows near 1.0350.

At the same time, US yields are also increasing, with the 10-year benchmark yield attacking the 3% threshold. Meanwhile, the 2-year yield rose to 2.8%, the highest since December 2018.