Central bank officials have announced adjustments of at least another 70 bp for the remainder of the year, and analysts are warning of a rise in risk.
He global dollar fell on Wednesday in a volatile session as markets grappled with a massive 50 basis point interest rate cut as well as the shift to an expansionary monetary policy stance by the United States Federal Reserve (Fed).
After the meeting ended, Federal Open Market Committee (FOMC) and that the authorities of the Fed announced that, finally, the long-awaited first rate cut was by 50 basis points – expectations were already leaning towards a expansive result in the days leading up to it, with money markets pricing in around 65% the probability of a half-percentage point cut—; dollar rose amid a volatile close. However, in the early hours of Thursday, it already marked a drop in its price.
Thus, the dollar index, The U.S. dollar, which measures the value of the greenback against a basket of six major currencies, fell 0.38 percent to $100.64 after reversing gains in early trading. It fell to its lowest level in more than a year of $100.21 in the previous session. The euro strengthened 0.4 percent to $1.1163.
In front of the yen, The dollar rose 0.33% to 142.73 as markets anticipate the Bank of Japan will leave interest rates unchanged on Friday. The dollar weakened 0.08% to 0.847 against the Swiss Franc and fell 0.34% to 7,070 against the offshore Chinese yuan.
Fed decision drags dollar down
“The decision of the Fed was quite bold, which predicts a rebound in risk and a further weakness of the dollar in the short term,” he told Reuters Lefteris Farmakiscurrency strategist of Barclays. The Federal Reserve brought rates from their highest historical range of 5.25% – 5.50% to 4.75% – 5%.
“The bar, however, is set quite high to rely on the Fed for greater weakness of the dollar in the longer term,” he added: “The relaxation cycle of the Fed “that the markets are discounting is quite significant.”
Money markets are expecting further rate cuts of 70 basis points in 2024 and 191 basis points in September 2025. Monetary policymakers at the Fed, meanwhile, are looking at a further 70 basis point cut in 2024 and a further 191 basis points in September 2025. Fed The Fed on Wednesday projected the benchmark interest rate would fall by another half-percentage point later this year, a full percentage point next year and half a percentage point in 2026, though it said the outlook for that long was uncertain.
“The interesting thing is that the half-point cut, which was quite unexpected or at least only half and half yesterday, has not really caused any additional damage to the dollar, which is quite surprising,” he said. Joseph Trevisanisenior analyst at FXStreet in New York.
“What it’s really doing, I think, is giving permission, so to speak, to the other central banks around the world, some of which have already started cutting rates, to go further with their rate cuts,” Trevisani said.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
