Concern over US Fed rate hike may keep markets on tenterhooks

In global markets the concerns over a Fed rate hike in the month of June are getting reflected in the asset prices including Gold and other commodities. Gold has slipped post the declaration of the US economic data which seemingly boosts a Fed rate hike possibility.

While discounting the US Fed rate hike in June, US dollar is gaining ground  which may lead to pressure on Crude Oil prices.The message from US Fed has been fairly unambiguous as far as rate hike in June goes, but the US Fed did mention that the rates may be hiked if the US economy data comes in stronger. So far the US economy data has been satisfactory, suggestive of a solid recovery in the economy. Several analysts believe that tighter interest rates in US may not be good news for emerging markets and emerging currencies as well. While few argue that tightening interest may be good for the US economy, but it may not be good for equity markets. We can expect increased volatility in coming sessions, in the run to the US Fed event in the month of June for both emerging markets: equity and currency.

Investor and traders need to be cautious and keep a close eye on the development in US markets with respect to the Interest rate hike by US Fed.