Precise Investors Editorial Team
Odds of a cut at the bank’s December meeting are now at 62%, down from around 85% earlier on Wednesday
The dollar gained on Wednesday after Federal Reserve Chair Jerome Powell pushed back against market pricing for another rate cut at the U.S. central bank’s December meeting, after the bank lowered rates as expected.
Wednesday’s rate cut drew dissents from two policymakers, with Governor Stephen Miran again calling for a deeper cut in borrowing costs and Kansas City Fed President Jeffrey Schmid favouring no cut at all given ongoing inflation.
The dissent from Schmid is hawkish, that captures the sentiment from a few Fed officials so there could be some pressure on Powell to hold back market pricing for a December cut, said Adam Button, chief currency analyst at investingLive in Toronto.
Powell said that U.S. central bank officials are struggling to reach a consensus about what lies ahead for monetary policy and that financial markets should not assume another interest rate cut will happen at the end of the year.
Odds of a cut at the bank’s December meeting are now at 62%, down from around 85% earlier on Wednesday.
The central bank further announced that it will restart limited purchases of Treasury securities after money markets showed signs that liquidity was becoming scarce, a condition the bank has pledged to avoid.
Traders are also focused on trade talks between the U.S. and China, with U.S. President Donald Trump due to meet China’s leader Xi Jinping on Thursday.
The dollar index was last up 0.63% on the day at 99.28, with the euro down 0.56% at $1.1585.
Both the European Central Bank and the Bank of Japan are expected to hold rates steady on Thursday.
The Japanese yen weakened 0.56% against the U.S. currency to 152.86 per dollar.
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