Yesterday, the Fed decided to cut rates as was widely expected but signaled that it is now planning to stay sidelined. That said, the dollar slid, and US equities gained, perhaps as investors remained unconvinced that no more cuts will follow. Ahead of the Fed, the BoC stood pat, but its statement had a more dovish flavor than previously. Today, it was the BoJ’s turn, which decided to stay on hold as well, and changed its forward guidance to signal more clearly the chances of a future rate cut.
FOMC Cuts Rates, But Signals a Pause
The dollar traded lower against all but one of the other G10 currencies on Wednesday and during the Asian morning Thursday. The greenback underperformed the most against NZD, AUD and SEK in that order, while gained only versus CAD.
Yesterday, the Fed decided to cut interest rates by 25bps, to the 1.50%-1.75% range, as was widely anticipated. However, in the statement accompanying the decision, officials...
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