Nov 7 (Bloomberg) — The dollar holds onto losses Thursday as the Federal Reserve cuts interest rates and avoids providing any clues on future pace of rate reductions.
The British pound rose as traders pared bets on the Bank of England further easing monetary policy after officials lowered rates, as widely anticipated, on Thursday.
- The Bloomberg Dollar Spot Index traded 0.8% lower on the day after Fed cut its benchmark lending rate by a quarter percentage point Thursday
- Fed Chair Jerome Powell avoided giving guidance on the December meeting during his press conference after the decision. Market pricing of the rate reductions at the last meeting this year didn’t change after Powell’s comments
- “A shift in stance doesn’t appear to be on the cards for December, the baseline has to be for a 25bp cut,” said Aroop Chatterjee, a strategist at Wells Fargo. “Powell was also careful to not tip his hand on any monetary policy implications of changes in fiscal and trade policy”
- “From his words, though, I read that we could definitely see a pause in December, if the labor market can keep up,” said Helen Given, a foreign-exchange trader at Monex. “November’s payrolls print is, once again, going to be absolutely crucial after October’s noisy one”
- President-elect Donald Trump is likely to allow Powell to serve out the remainder of his term, CNN reports, citing a Trump senior adviser
- Powell said during the news conference he would not leave his post if asked by Trump
- GBP/USD rises 0.8% to 1.2987
- The Bank of England cut borrowing costs for the second time this year, but stopped short of signaling faster easing, warning that the budget could drive up inflation by as much as half a percentage point
- BOE officials said the UK bond selloff that followed last week’s budget announcement was exacerbated by investor positioning, a signal they believe the worst of the slide is over
- The Bank of England cut borrowing costs for the second time this year, but stopped short of signaling faster easing, warning that the budget could drive up inflation by as much as half a percentage point
- EUR/USD rose 0.7% to 1.0807
- German opposition leader Friedrich Merz said Chancellor Olaf Scholz should submit to a vote of confidence by early next week at the latest, paving the way for fresh elections as soon as mid-January
- USD/JPY fell 1.2% to 152.79; Japan’s chief currency official Atsushi Mimura said authorities will take appropriate action against any excessive currency moves after seeing one-sided, sudden shifts
- AUD/USD rallies 1.7% to 0.6683
- Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly
- GBP/USD rises 0.8% to 1.2987
