* Qatari largest gas facility damaged in Iranian energy retaliation

* FOMC hold rates in 11-1 vote, ‘neutral’ statement and hawkish-leaning Powell

* Dollar jumps as Fed keeps rates unchanged, Brent crude surges more than 6%

* Stocks extend losses after Fed expresses high level of uncertainty

FX: USD pushed to the upside especially during the Fed decision and press conference. The statement was marginally dovish with the median dot for 2026 and 2027 still showing one rate cut in each year. But growth and inflation were revised modestly higher conveying a ‘neutral’ hold on balance, with growth implying productivity boosts from AI. Chair Powell heavily emphasised the current level of uncertainty, and a ‘wait-and-see’ stance with zero guidance. But it seemed his main concern was inflation persistence over growth weakness and frustration over sticky non-housing services prices. Markets eyed rising oil prices on the day, with Brent up more than 6%, and that pushed the greenback higher too.

EUR fell on rising oil prices and souring risk sentiment. There were limited fresh euro drivers as focus was on Middle East headlines. Today’s ECB meeting will bring no major changes to policy, but a possible move away from the prior ‘good place’ of policy. See more below. The recent low sits at 1.1410 with minor Fib level above at 1.1569.

GBP outperformed most of its peers but was modestly lower on the day. Again, there was limited UK news flow with eyes on geopolitical events and today’s BoE meeting. The cutting cycle by the MPC is likely to be pushed back, but the tone of the statement and how far will be key for sterling.

JPY weakened as the major broke previous highs from January around 159.46 and headed towards 160 and major intervention territory. Ahead of the BoJ meeting, the setup in June 2024 looks to be similar to today. We had a weak yen, strong wage negotiations, and market priced 50/50 for the following meeting. That time, the bank teed up the hike with signals at the June meeting, then hiked in July. That said, PM Takaichi has not been very clear about the yen.

US stocks: The S&P 500 lost 1.36% to close at 6,625, the Nasdaq was 1.43% lower at 24,425 and the Dow Jones settled lower by 1.63% at 46,225. The Dow again underperformed as it fell below the 200-day SMA at 46,528. The S&P 500’s sits at 6,615. Every sector was in the red with Consumer Staples, Consumer Discretionary and Materials the big laggards, while even Energy was lower on the day (-0.16%). Micron slid after hours as revenues almost tripled, topped estimates as demand for memory soars. Lululemon surged 3.8% with a substantial board refresh ahead. Macy’s jumped nearly 5% after the tariff impact was expected to be smaller than forecast.

Asian stocks: Futures are mixed. APAC stocks were mostly higher after green stocks Stateside. The ASX 200 saw gains in tech and utilities but softness in health. Money markets see a coin toss chance of another RBA hike in May. The Nikkei 225 moved back above 55,000 with stronger data and a surprise surplus, plus a US agreement on rare earths and copper at the summit between Trump and Takaichi. The Hang Seng and Shanghai Composite were mixed with weakness in auto stocks and oil majors.

Gold fell below the 50-day SMA at $4,961 as the stronger dollar and Treasury yields beat any haven buying. 

Day Ahead – BoE and ECB Meetings

Signaling and reaction function from both central banks today will be the focus. A more hawkish tone from ECB President Lagarde is expected, who will likely say the bank is monitoring the situation very closely and the Bank is “ready to act” if the oil‑driven inflation shock persists and second round pressures re-emerge. The prior “good place” remains intact for now but is likely to change this time. If Lagarde leans into the upside inflation risks, expect a firmer euro though perhaps only short-term, and some pressure on European equities. If she sounds more balanced, stressing weak growth and data‑dependence, the “one‑and‑done” hike pricing for this year could fade.

The BoE is set to hold bank rate at 3.75% as the oil shock keeps inflation risks alive, even though the medium‑term bias is still toward cuts. Higher energy prices have rendered a March rate cut highly unlikely but the MPC will probably keep its options open this week, awaiting clarity on how long the crisis is likely to last. A big question is the vote split; most expect 7-2 in favour of no change so a greater number of voters would be a dovish surprise. Key is any hint on timing and size of the next moves, with Bailey previously nodding to two cuts and many BoE watchers now pushing forecasts back to the autumn or even later as Middle East risks grow.

Chart of the Day – GBP/USD in a downtrend

Cable has fallen in a fairly neat bear channel since topping out in late January at 1.3868. That means a series of lower highs and lower lows. Prices got close to a minor retracement Fib level (78.6%) at 1.3193 before another rebound this week up to the major Fib level (61.8%) at 1.3338. The 200-day SMA sits at 1.3434 with the midpoint of the November low to January high at 1.3439.