US Dollar Climbs After FOMC Cuts Rates But Firms Language
The US Dollar spiked higher right after the Federal Reserve revealed another 25-basis point interest rate cut as expected – its third in a row. The FOMC decision comes as little surprise, however, seeing that overnight swaps were pricing in a rough 95% probability that the Fed would cut rates again prior to the October meeting. The US central bank’s benchmark interest rate – the Federal funds rate (FFR) – now sits at a target range of 1.50-1.75%.
While it might be expected that the US Dollar would fall following an interest rate cut from the Fed, the move was largely priced in already. Furthermore, the latest FOMC statement cut out dovish language previously detailed in the September Fed meeting press release. Specifically, the Fed removed that it would “act as appropriate to sustain the expansion,” which is being interpreted as a firmer monetary policy stance and creating uncertainty over the market’s priced in rate cuts for December and beyond.
US DOLLAR INDEX PRICE CHART: 5-MINUTE TIME FRAME (OCTOBER 30, 2019 INTRADAY)
(Click on image to enlarge)
Chart created by @RichDvorakFX with TradingView
The DXY Index – a popular basket of major US Dollar currency pairs heavily weighted toward EUR/USD – is climbing higher in response.
USD/JPY PRICE CHART: 5-MINUTE TIME FRAME (OCTOBER 30, 2019 INTRADAY)
(Click on image to enlarge)
USD/JPY climbed spiked to session highs following the latest FOMC decision as the expectations for further interest rate cuts from the Fed grows increasingly ambiguous.
Markets now await further details from Fed Chair Jerome Powell who is speaking at the post-FOMC decision press conference.
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