US markets finished mixed in a chaotic session as the long-awaited June FOMC monetary policy meeting concluded. As expected, the Fed held rates steady after 10 straight hikes, the tone of the accompanying statement was quite hawkish, signalling higher for longer in rates and the possibility of more hikes to come. More mixed signals were given by Chair Powell in his presser where he seemed to walk back some of the hawkish narrative, resulting in a real see-saw session in all risk assets.

FX Markets

USD sold off pre-Fed with the Dollar Index sliding to hit a low of 102.66, after a cooler-than-expected PPI figure. Price action reversed after the hawkish FOMC statement seeing a steep rally in DXY rising from 102.75 to 103.27, to round off the volatile session, the “dovish” presser from Powell saw a good chunk of those gains disappear.

AUD and NZD were the G10 outperformers with the Kiwi seeing much stronger gains than the Aussie. Both the AUD and NZD were already outperforming pre-Fed, finding support from the positive risk environment and PBoC actions on Tuesday. NZDUSD and AUDUSD posted highs of 0.6236 and 0.6835, respectively. NZD has sold off early in the Asian session after a weak GDP reading, seeing NZ enter a technical recession after the economy shrank 0.1% in the first quarter., AUD traders will have employment figures released at 11:30 AEST to contend with.

GBP saw strong gains vs the USD. Cable tested 1.27 to the upside pre-Fed making a fresh YTD high and at the highest level since April 2022 as GBP continued to rally post the hot labour market data on Tuesday with the GBP gaining support as the markets price in a hawkish BoE going forward.

Gold bounced around in a similar path to the USD, XAUUSD tested it’s major support at 1939 with the USD surging post-FOMC, but sound solid buying at that level to again hold the lower band of it’s May/June range.

In the day ahead, the Asian session will see what could be an exciting AUD session, with Australian employment figures due, and Chinese Industrial production and retail sales not long after.

The ECB is also due to release their monetary policy later in the session, a hike of 25bp being fully priced in, but again as with the Fed it will be the accompanying statement and subsequent presser that have the most potential to cause volatility.