Yesterday, the markets took a turn key, because, judging by the desperate growth of risky assets, investors are trying to assert themselves. And time plays a key role here, as has just passed us by a cavalcade of officials from the Fed to the decisive comments hinted at an accelerated rate increase this year. This commitment has led to a sharp rise in short-term rates in the US and lower risk appetite, which allowed the dollar to strengthen its position considerably, especially against the risk currencies. However, judging by the dynamics of the yesterday, the market says that it was not afraid of the aggressive attitude of the Fed.
Of course, this movement is one day old, so perhaps it is too early to draw any conclusions; and yet, such is our first conclusion, and we will wait for confirmation in the dynamics of the next sessions.
How it will look like? Interest risk will remain on the background of stable or rising expectations for Fed rates will lead to a strengthening of the dollar against the low-yielding currencies and currencies of countries with quantitative easing, such as JPY, EUR and CHF. Perhaps even the weakest currency will be able to strengthen slightly against the dollar in the near future, or at least slow its decline (these include AUD, CAD and currencies of developing countries). Something like we saw yesterday in the pair USD/TRY, which hit a powerful wave of sales, despite the fact that short-term rates in Turkey declined slightly after the meeting of the central bank, which left interest rates unchanged, in line with expectations.
