Dollar claws back losses after Fed goes big on rate cut
Updates at 0440 GMT
By Rae Wee
SINGAPORE, Sept 19 (Reuters) -The U.S. dollar rose broadly on Thursday, reversing a brief tumble in the immediate aftermath of the Federal Reserve's outsized interest rate cut that had been largely priced in by markets.
The U.S. central bank on Wednesday kicked off its monetary easing cycle with a larger-than-usual half-percentage-point reduction that Chair Jerome Powell said was meant to show policymakers' commitment to sustaining a low unemployment rate now that inflation has eased.
While the size of the move had been anticipated by investors in part due to a slew of media reports pointing in that direction ahead of the decision, it defied the expectations of economists polled by Reuters, who were leaning toward a 25-basis-point cut.
Still, markets reacted in a typical "buy the rumour, sell the fact" fashion that kept the dollar on the front foot in Asian trade, as it recouped losses made against its peers in the run up to the Fed meeting.
Against the yen JPY=EBS, the greenback gained as much as 1.2% to hit an intraday high of 143.95 earlier in the session. It last traded 0.62% higher at 143.15 yen.
"There was a sharp squeeze in short dollar/yen positions as markets took profit post-Fed," said Christopher Wong, currency strategist at OCBC.
The Swiss franc CHF=EBS fell about 0.3% to 0.8487 per dollar, while the euro EUR=EBS dipped 0.01% to $1.1117, away from a three-week high hit in the previous session.
The dollar index =USD, which measures the greenback against a basket of six peers, rose marginally to 101.03, having slid to an over one-year low of 100.21 in the previous session.
"Obviously, (there was) a lot of volatility on the announcement, but in terms of the pricing action and the information that came out ... it's not really that controversial in a sense," said Rodrigo Catril, senior FX strategist at National Australia Bank (NAB).
"It's sort of been pretty close to what the market has been pricing, particularly in terms of expectations of - arguably a little bit more than a 100 - but 100 bps of rate cuts this time around and another 100 next year, and also a terminal rate that is below 3% as well. So the big picture ... is not materially different."
Fed policymakers on Wednesday projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full percentage point next year and half of a percentage point in 2026, though they said the outlook that far into the future is necessarily uncertain.
"Our view is that the dollar will depreciate next year. That is a cyclical story, not a structural story," said Eric Robertsen, Standard Chartered's global head of research and chief strategist at a media roundtable in Singapore on Wednesday.
"We think the dollar is going to weaken because the Fed is easing interest rates and the global economy will experience a soft landing, which tends to be a benign scenario that tends to be negative for the dollar."
Sterling GBP=D3 fell 0.04% to $1.3208 after scaling a peak of $1.3298 in the previous session, its strongest level since March 2022.
That came in the wake of data on Wednesday which showed British inflation held steady in August but sped up in the services sector closely watched by the Bank of England, reinforcing bets that the central bank will keep interest rates on hold later in the day. 0#BOEWATCH
"When it comes to the Bank of England, clearly those inflation numbers yesterday show that they still have a concern or a problem with inflation, and in particular services inflation is still too high for comfort," said NAB's Catril.
"So to expect an easing today because of what the Fed has done seems a little bit too hard to believe."
Elsewhere, the Australian and New Zealand dollars drew support from domestic data surprises.
An upbeat jobs report showed Australian employment blew past forecasts for a third straight month in August while the jobless rate held steady, reinforcing the view that the labour market remains tight.
That helped lift the Aussie AUD=D3 0.44% to $0.6794.
The kiwi NZD=D3 meanwhile traded 0.07% higher at $0.6212, after data showed the New Zealand economy contracted by 0.2% in the second quarter, a bit better than the 0.4% fall expected.
World FX rates https://tmsnrt.rs/2RBWI5E
The Fed’s dot plot https://reut.rs/3Xo3JtO
Fed cuts rates by 50 basis points, joins easing cycle https://reut.rs/3MPDwzD
Reporting by Rae Wee; Editing by Christopher Cushing & Shri Navaratnam
Aset Berkaitan
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
