After the Fed’s decision on rates, the global dollar weakens

In a day marked by movements in global markets, the dollar experiences a significant drop, leading the momentum of currencies in the Asia-Pacific region, especially sensitive to risk.

This change in trend is due to the growing conviction that interest rates in the United States have reached their peaksince the Federal Reserve chose to maintain them without changes at their last meeting.

Now, investors turn their attention to the Bank of England and await its monetary policy statement in the coming hours, looking for signals similar to those of the Federal Reserve.

Fed Chairman Jerome Powell leaves the possibility of a rate increase open, but with the rate ceiling at 5.5%, its highest level in more than two decades, indicates that the risks of overacting or falling short are balanced.

Dollar: the data analyzed by the market

Markets interpret this approach cas a green light to maintain a less than 20% probability that rates will rise in December. This translates to a 23 basis point drop in 10-year Treasury yields from Wednesday’s highs, as well as a rally in the stock market and risk-sensitive currencies.

Danske Bank’s Kristoffer Lomholt notes that “Powell has the opportunity to express greater concern given near-term inflation expectations, but he chooses not to. There is an opportunity to send a stronger signal, but he chooses not to, and I think it’s the markets’ reaction.”

The dollar index, which measures your performance against a basket of six major currenciesfalls 0.1% to 106.41 units, accumulating a decrease of close to 0.8% from its maximum on Wednesday.

Meanwhile, the euro rose 0.3% to $1.0598, the Swiss franc rose for the second day in a row, and the yen benefited from fresh momentum from its one-year low to 150.155 per dollar.

For its part, the pound sterling gains 0.2% to 1.2173 dollars, while it remains at 87.14 units per euro in anticipation that rates will remain at high levels.