Forex Today: Fed delivered, stocks plunged, dollar soars

What you need to take care of on Thursday, September 22:

The dollar stands victorious after the US Federal Reserve spurred volatility across the FX board. As widely anticipated, the American central bank hiked the benchmark rate by 75 bps to 3.25%, while policymakers maintained their determination to bring inflation down to target. However, there was no innovation in monetary policy; generally speaking, they are confident about economic progress.

At the same time, the Fed upwardly reviewed its inflation projections, with the PCE price index now seen at 5.4% this year and at 2.8% in 2023. It won’t be until 2024 when it will reach the 2% target. Growth suffered downward revisions, the steeper one in the near term. For this year, the Gross Domestic Product is now seen at 0.2%, down from 1.7%, but for the upcoming years, it is seen above 1%. Finally, the median expectation for the federal funds rate at the end of 2023 is 4.6%  from 3.8%.

Chief Jerome Powell was cautiously optimistic about economic progress, which put a cap on the dollar’s appreciation. Nevertheless, as Wall Street plunged to fresh lows, the greenback recovered ground.

Risk aversion led the way during the European session, as  Russian President Vladimir Putin announced a mobilization of reserve forces. Additional 300,000 citizens have been called to serve in Ukraine as Moscow loses ground in Ukraine. Putin claimed that the West wanted to destroy Russia and reiterated the plan to annex more of its neighbor country. EU member states held a meeting to discuss a coordinated response to the continuation of the war, according to European Commission spokesman Peter Stano.

The EUR/USD pair plunged to 0.9812, its lowest since October 2002, and currently hovers around 0.9860. GBP/USD also plummeted, now trading at 1.1280. Commodity-linked currencies are among the weakest, weighed by the poor performance of Wall Street. The AUD/USD pair trades at around 0.6640, while USD/CAD pressures highs in the 1.3440 price zone.

Safe-haven assets retain modest gains against the greenback. The USD/JPY pair hovers around 144.00 while spot gold jumped to $1,690 a troy ounce but gave up some $20 ahead of the close. Finally, WTI settled at $83.20 a barrel, marginally lower in the day.

Near-term US Treasury yields soared. The 2-year Treasury note currently offers 4.03% after reaching an intraday peak of 4.12%. The yield on the 10-year note eased to settle at 3.51%.

The Bank of Japan is next in line, as the monetary policy decision is coming up in the next Asian session. Finally, the Bank of England and the Switzerland National Bank will announce their decisions during European trading hours.

Cardano price: ADA is ready to explode, final stretch before Vasil hard fork