What's the market narrative right now?
Markets trade stories: "the Fed is behind the curve", "inflation is peaking", "the dollar is losing its edge". The narrative decides which data matters and which surprises.
Post your read:
- the dominant story as you see it
- which releases could confirm or break it
- the pairs that express it best
Background: how interest rate decisions move currencies and risk-on risk-off.
Background: How interest rate decisions move currencies
Central bank decisions are the biggest scheduled events in forex. Why rates matter, why a hike can weaken a currency, and what to read beyond the decision.
Does a rate hike always strengthen a currency?
No. If the hike was fully expected, it is already in the price. The currency can even weaken if the central bank signals that it won't raise rates further.
What does hawkish mean?
Leaning towards higher interest rates to control inflation. A hawkish surprise usually supports the currency.
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