Game of two halves ends with a whimper, not a bang

This week’s much-anticipated round of central bank policy announcements made only limited impact on currency markets, which for the most part are broadly unchanged on the week. Indeed, despite the significant hawkish shift in the FOMC’s message on Wednesday, the dollar fell slightly – suggesting investors had discounted some chance of an even more dramatic shift from US policymakers. Instead, the BoE’s surprise rate hike and, to a lesser extent, the ECB’s somewhat more hawkish tone yesterday sent sterling and the euro higher. But those moves have largely unwound today as risky assets have again come under pressure, in part on renewed worries about the spread of the Omicron variant.