The US dollar posted some recovery against most major currencies on Wednesday as reflected by a 0.20% increase in the USDX on the iFOREX trading platform. As widely expected, the Federal Reserve maintained steady interest rates and reaffirmed its projection of a 50-basis point rate cut by the end of 2025, signaling continued stability in its long-term outlook.
Gold prices extended their recent gains, reaching new highs on Wednesday with a 0.61% increase, after the Federal Reserve's policy meeting. This surge reflects growing safe-haven demand amidst escalating geopolitical tensions, including the collapsed Israel-Hamas ceasefire and the political turmoil in Turkey, sparked by the arrest of Istanbul Mayor Ekrem Imamoglu, a prominent opponent of President Erdogan.
The Hong Kong 50 index experienced a minor setback, trading around 1.8% lower as of Thursday 07:20 AM GMT, declining from its three-year peak. This decline, an anomaly in Asia's generally positive market performance, was mainly attributed to investors securing profits in the technology and internet sectors, the very areas that had driven the index's earlier gains, which were driven by increased confidence in China's AI and expectations of increased stimulus. For 2025 the index is trading higher by around 20%, significantly outpacing its global counterparts.
In corporate news, Nvidia intends to invest up to half a trillion dollars in U.S.-made electronics over the next four years, according to a Financial Times report quoting CEO Jensen Huang. This move comes as the company seeks to alleviate investor concerns about AI chip demand following the launch of a competitive chatbot by China's DeepSeek, which reportedly uses fewer resources. Later in the day, quarterly earnings reports are anticipated from Accenture, Nike, Micron and FedEx.
On the cryptos front, Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, experienced gains of 5.01% and 6.5% respectively on Wednesday. This surge in value reflected an improved risk appetite following the Federal Reserve's decision to maintain its rate cut projections and indicate no significant policy shifts despite heightened economic uncertainty.
On Thursday, attention will likely turn to the BOE interest rate announcement and the subsequent weekly jobless claims from the U.S., the Philly Fed Manufacturing index and U.S. existing home sales.
EUR/USD
The EUR/USD remained supported above the 1.0900 level on Wednesday, benefiting from a softer U.S. dollar as the Federal Reserve opted to keep interest rates unchanged. The pair ended the session with minor losses.
Fed Chair Jerome Powell highlighted that growth projections for 2025 have been notably downgraded, citing uncertainty stemming from trade policies under the Trump administration. The Federal Open Market Committee (FOMC) revised its GDP forecast for the end of 2025 down to 1.7%, a sharp drop from the 2.1% estimate issued in December.
Powell maintained that the overall economic outlook remains stable. However, rate markets continue to reflect a growing expectation of monetary easing, with traders pricing in a 65% probability of a quarter-point rate cut—or larger—on June 18.
Looking ahead, European Central Bank President Christine Lagarde is set to speak later today, coinciding with the start of the EU Leadership Summit.
WTI Oil
Oil prices edged higher on Wednesday after U.S. government data revealed a decline in fuel inventories. However, gains were tempered by the Federal Reserve’s decision to hold interest rates steady, keeping broader economic concerns in focus.
Despite a 1.7-million-barrel rise in U.S. crude stockpiles, exceeding the 512,000-barrel forecast, diesel and heating oil inventories dropped 2.8 million barrels, far surpassing the expected 300,000-barrel decline, providing some support to oil prices.
Oil traders also kept a close watch on escalating geopolitical tensions. The Israeli military resumed ground operations in the central and southern Gaza Strip, just a day after local health workers reported more than 400 Palestinian casualties from airstrikes that shattered a ceasefire.
Meanwhile, U.S. President Donald Trump vowed to continue strikes on Yemen’s Houthi militants and warned that Iran would be held accountable for any attacks by the group, which has disrupted shipping in the Red Sea.