Federal Reserve meeting

How does the Fed meeting affect markets?

The FOMC meeting and policy statement give a clear indication of the state of the US economy. This means they typically produce strong market movements in all areas, from stocks to bonds, and commodities such as gold. 

Forex: Higher interest rates tend to make the US dollar more attractive for both domestic and global investors, which means any change in rates will likely impact the dollar’s value.

Commodities: The value of gold tends to fall if interest rates rise. This is because the precious metal becomes less attractive to investors when cash savings and assets like bonds are offering higher yields.

Stocks/indices: Higher rates can steer some investors away from stocks and into other areas such as cash. Lower rates may make stock trading more attractive as companies can use it to borrow more capital and drive growth.

Bonds: Bond prices tend to go down when interest rates rise and vice versa. However, the rate of increase or decline depends on bond maturity. The longer the maturity, the greater the drop if rates are hiked.