Markets higher as US Federal Reserve holds line, trade hopes lift futures

Across the forex market, the US dollar initially strengthened following Fed Chair Jerome Powell’s press conference after last night’s rate decision. The US central bank left rates unchanged, as expected. It also reaffirmed its cautious stance and dismissed the idea of cutting rates in response to tariff-driven uncertainty.

The dollar gave back some of these gains in overnight trade, but it was firmer again this morning. Despite this, the Dollar Index continues to consolidate, having rallied a touch off the multi-year lows hit last month. It is slowly picking up from very oversold levels, but it has yet to stage a more significant rally.

The Japanese yen was weaker across the board this morning. Otherwise, FX price action remains sluggish and subdued, with low conviction and tight ranges dominating this morning’s trade.

Gold experienced a volatile overnight session. Initially, it dropped following the Federal Reserve’s decision to keep rates on hold. Then it bounced sharply in the early part of the Asian Pacific session, briefly rallying back through the $3,400 mark. But prices then fell sharply, with gold losing close to $100 (3%) over the next few hours.

It subsequently steadied early in the European session, bouncing off the 20-day moving average, but there’s no clear overall direction. Gold is no longer as overbought as it was three weeks ago, which increases the potential for further gains. But it may have to consolidate further to encourage fresh buying.

Crude oil was little changed on Thursday morning. Prices managed to stabilise following yesterday’s steady sell-off. Oil started the week by gapping sharply lower. This was in response to the weekend announcement from OPEC+ that the cartel was once again increasing output by more than expected.

This was to reverse the production cuts that have supported prices over the last couple of years. But OPEC+ is unwinding the cuts at a much faster rate than analysts anticipated. This decision appears to be driven by Saudi Arabia, which has lost patience with OPEC+ members who have ignored quotas.

Saudi also appears to be working with the Trump administration to keep downward pressure on the oil price. But traders should not interpret this as a clear signal to short crude.

Natural Gas prices were flat, hovering around the 3.50 btu level. The recent bounce has stalled for now, and traders are watching for confirmation that momentum can continue to build.

Cryptocurrencies surged overnight, with Bitcoin up around 3% and back within spitting distance of $100,000. Meanwhile, Ether jumped close to 8%. Cryptos got caught up with the general increase in risk appetite, and near-term direction looks likely to be governed by movements across US stock indices.

The VIX pulled back towards 23 overnight, easing slightly as markets absorbed the Fed’s latest monetary policy statement, while anticipating some improvement on the tariff front. This move marks a continuation of the recent drop-off in volatility, although the index remains well above the 20 mark, which signals elevated investor caution.

While the recent downward drift suggests that investor anxiety is abating, the broader picture shows that elevated volatility remains a core feature of the current landscape. Risk events, geopolitical developments, and sudden headline shocks — particularly around tariffs and global trade talks — continue to shape market mood and momentum.

For now, the VIX’s position reflects a market that is not in crisis mode but still far from settled.

In corporate news, chip designer ARM collapsed 11% after hours. Today’s focus shifts to earnings reports from Paramount and Warner Bros, with investors watching closely for any tariff-related commentary and forward guidance.

On the macro front, weekly US jobless claims will provide the latest read on the labour market, while central bank action takes centre stage with the Bank of England’s rate decision due today.

Reports of an imminent US-UK trade deal and progress toward a US-China meeting have kept investors hopeful, but on edge. Meanwhile, Citigroup flagged that the bullish momentum of US equities has stalled as short positions begin to build.

In Europe, the EU has announced plans to end all imports of Russian gas — a significant geopolitical move. At home, Halifax reported UK house prices rose 3% year-on-year, providing some stability to the housing narrative.

The Bank of Japan appears increasingly divided over its next steps, with policymakers split on whether rate hikes are appropriate at this stage.

Powell offered little to excite, but his consistent tone was enough to keep markets steady. As ever, it’s not always what’s said — but what isn’t — that drives the response. Futures jumped overnight as attention turned to trade headlines, including progress on the US-UK and US-China fronts.

The dollar gave back gains, gold reversed, and crypto surged — clear signals that markets are rotating into a different posture. Volatility remains elevated but contained.

Traders should keep their eyes on the tape — in this environment, headline whiplash is still the name of the game.