Dollar loses ground post Fed

The dollar has lost some ground against both the euro and sterling notwithstanding the Fed’s further 75bps hike in US interest rates yesterday, dipping to over $1.02 and close to $1.22 respectively. This in turn leaves the single currency-pound exchange rate unchanged at 84p

US equity markets rallied post the Fed’s rate announcement with the S&P 500 closing almost 3% higher, while European stocks had earlier finished with gains of almost 1%

In government bond markets,  US 10-year yields are little changed trading in and around 2.80% and  equivalent German yields are marginally higher at about 1%

The Fed raised interest rates by 75bps for a second meeting running, bringing the cumulative increase since March to 225bps. It said further rate hikes may be appropriate while noting signs of slowing activity in the economy, and said it would make future rate decisions on a meeting-to-meeting basis

Data due today includes a first estimate of second quarter GDP growth in the US, which according to the consensus is expected to show the economy expanded at a very modest pace in the three months to June, as well as the July Economic Sentiment Indicator for the Euro area