Dollar Rallies Post Fed, GDP Figures Eyed

USD

The dollar index, which measures the greenback against a basket of major currencies, edged higher to 90.87 following the Federal Reserve monetary policy decision. The Federal Reserve kept policy unchanged as widely expected. Interest rates remained at 0.25%, and asset purchases at $120 billion per month. Chairman Powell was neutral in his presser and didn't deliver any surprises, which bolstered the dollar. Market participants will look forward to the first reading of the fourth-quarter GDP, which gives an insight into the economic recovery late last year. The EURUSD dropped to $1.2058, and the GBPUSD dipped to $1.3639.

Equities

Futures tied to major US stock indices declined sharply as the Federal Reserve delivered a neutral approach, and earnings disappointed. The Fed kept policy unchanged and reiterated that they would alter the monetary policy based on incoming economic data. On the other hand, Tesla's earnings disappointed, hinting that investors are over pricing the possible growth. Meanwhile, the frenzy of "Wallstreetbets" continued with more small-cap stock pumped higher. The Dow Jones Industrial Average futures dropped to 30049, the S&P500 futures declined to 3703, and Nasdaq futures tumbled to 12883.

Metals

Precious metals prices declined significantly as the dollar recovered. The price of a gold ounce tumbled to $833, the price of a silver ounce fell to $24.85, and palladium futures extended losses, falling to $2300.

Oil

Oil prices were almost flat as rising woes over the impact of new COVID19 variants on oil-demand offset the drop in crude inventories. The US Energy Information Administration reported a sharp decline of 9.910 million barrels in US inventories. However, the prospects of new strains weighing on economic activity capped the rally. The West Texas Intermediate crude March delivery held steady near $52.50, and Brent Blend April delivery hovered near $55.30.

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