Larger Fed cut raises risks for US dollar
Main U.S. indexes rally, Nasdaq up >2.0%
Tech leads S&P sector gainers; utilities weakest group
Euro STOXX 600 index up ~1.3%
Dollar off; gold, crude up ~1%; bitcoin rallies ~4.5%
U.S. 10-Year Treasury yield rises to ~3.73%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
LARGER FED CUT RAISES RISKS FOR U.S. DOLLAR
Federal Reserve Chair Jerome Powell cautioned against assuming that larger rate cuts will be the norm after the U.S. central bank launched its rate cutting cycle with a 50 basis point reduction on Wednesday, but the move raises the risks of an even weaker dollar in the near term.
“Until recently, the market believed in U.S. dollar exceptionalism and the idea that U.S. growth would outperform, and rates would stay higher than elsewhere. It's now clear that the Fed will be cutting just as fast or more quickly than other G10 central banks. So, there's plenty of air to come out of the U.S. dollar if the Fed keeps up with this,” said Adam Button, chief currency analyst at ForexLive in Toronto in an interview.
The dollar index tumbled to its lowest level since July 2023 after the Fed cut on Wednesday, before rebounding to end up on the day. On Thursday the greenback was down 0.10%. =USD
Powell called the 50 basis point cut a "recalibration" to account for the sharp decline in inflation since last year; he noted that the economy remained strong but the central bank wanted to stay ahead of and stave off any weakening in the job market.
However, the Fed’s decision leaves the greenback “still in a softer position compared to most developed market peers. Powell tried to mitigate the dovishness of the outsized rate cut, but... it would be hard to fight the perception that it was the dovish market pricing that pushed the Fed over the line for the 50bp move,” ING analyst Francesco Pesole said in a note.
“If the Fed is perceived as unwilling to disappoint market expectations, investors may continue to prefer erring on the dovish side,” Pesole added. “Ultimately, we see more room for markets to build speculative dollar shorts into the US election, especially considering the USD-negative candidate (Kamala Harris) continues to fare quite well in post-debate polls.”
Fed policymakers projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full percentage point next year, and half of a percentage point in 2026.
(Karen Brettell)
*****
FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
THURSDAY DATA ROUNDUP: FED HANGOVER - CLICK HERE
WALL STREET RALLIES AS FED PIVOT SINKS IN - CLICK HERE
JEFFERIES SAYS BANKING INDUSTRY'S INTEREST INCOME IN JEOPARDY, BUT DEPOSITS COULD BE CHEAPER - CLICK HERE
NASDAQ COMPOSITE: LAND OF CONFUSION - CLICK HERE
CENBANK DIVERGENCES ENDING, APART FROM JAPAN - AMUNDI - CLICK HERE
R&D PICKS IN EUROPE - CLICK HERE
MINERS DO HEAVY LIFTING AS STOXX RISES AHEAD OF BOE - CLICK HERE
STOXX EYES JUBILANT START AFTER FED'S BUMPER CUT - CLICK HERE
UK INFLATION TO KEEP BOE ON CAUTIOUS PATH - CLICK HERE
Policy rates at major central banks https://reut.rs/3ZtWu6z
Aset Terkait
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
