This week is set for Central Bank rate decisions. After the Fed decided to keep its interest rates unchanged on Wednesday, the Swiss National Bank and the Bank of England followed the same strategy yesterday. This brought the currencies of these countries down, while the US Dollar and Treasury bond yields gained.
The Swiss National Bank and the Bank of England keep rates stable
Yesterday both the Swiss National Bank and the Bank of England agreed to keep interest rates stable, surprising markets.
Following the decisions, the Swiss Franc and the British Pound fell as markets expected both central banks to raise interest rates at least one last time. The GBP/USD pair traded lower than the 1.2300 benchmark.
The US Dollar soared yesterday
The US Dollar was the winner of the session yesterday. This is especially due to the Federal Reserve (Fed) convincing markets that interest rates will remain at the highest levels in two decades for a long period of time.
This news also caused Treasury bond yields to continue rising, with the 10-year treasury yield reaching 4.45%, its highest level since 2007.
Stock indices fell on unemployment claims data
The North American stock indices continued to decline yesterday. The decline was due to the high market interest rates which rose higher after the release of the US unemployment claims data. The report showed a total of 201k, the lowest since January, indicating a still solid labour market.
The Nasdaq index experienced the greatest fall. Along with the S&P500 and the DowJones, the three indices are beginning to show worrying signs of vulnerability from a technical perspective with head-shoulder patterns. If confirmed, it could open the way to greater losses.
Breakdown of technology stock movements
It is worth highlighting the yesterday’s performance of the following technology stocks:
Cisco Systems Inc. fell after agreeing to buy the cybersecurity company Splunk Inc. in a $28 billion deal.
Arm Holdings plc briefly fell below its initial public offering price yesterday.
Broadcom Inc. sank following a report that Alphabet Inc.'s Google is thinking about dropping the company as a supplier of artificial intelligence chips starting in 2027.
Broadcom Ltd monthly chart, September 22, 2023. Source: CAPEX.com WebTrader.
- The Swiss National Bank and the Bank of England surprised markets by leaving their rates unchanged.
- The Swiss Franc and the British Pound fell on the news.
- The GBP/USD pair traded lower below the reference level of 1.2300.
- The US Dollar was the big winner of yesterday’s session.
- Treasury 10-year treasury yield reached its highest level since 2007.
- American indices continued to fall on unemployment claims data.
- Technology stocks suffered the most.
Sources: Bloomberg, Reuters