Market wrap: dollar recovers initial Fed losses – ANZ

In a market  wrap, analysts at ANZ  Bank New Zealand Limited explained that the USD  slipped lower on the Fed announcement but recovered.

Key Quotes:

FED: As universally expected, the Fed hiked the federal funds rate 25bps, with the statement and forecasts coming in largely as expected. Forward guidance from the Fed’s dot plot was unchanged, continuing to suggest a fourth rate hike in 2018 and three rate hikes in 2019. Language describing the policy stance as “accommodative” was removed, but Fed Chair Powell later stated that “Dropping accommodation does not change anything with regards to the path of policy”.

EMERGING: Details regarding China’s tariff cut plans are begging to emerge. China will cut import tariffs on 1,585 different products on 1 November, state radio reported. The combination of these and other tariff cuts this year is said to save consumers and companies about USD8.7bn. The average import tax for some machinery will be reduced to 8.8% from 12.2%, for textiles and construction materials to 8.4% from 11.5%, and for paper and some others to 5.4% from 6.6%, they reported. There was no indication of whether imports from the US would be included.

WINNING: Meanwhile, President Trump stepped up his hawkish commentary against China while chairing the UN Security Council. Specifically, Trump said, “China has been attempting to interfere in our upcoming 2018 election. They do not want me or us to win because I am the first president to challenge China on trade. And we are winning on trade. We are winning on every level.”