US Dollar is trading firmly in the green.
The US Dollar (USD) is roaring at the start of the US trading session and is anticipated to rise further after US Federal Reserve (Fed) Chairman Jerome Powell delivered the expected hawkish pause. In the US Dot Plot (Phillips curve), the devil was in the details, with the Fed remaining over 5% for the most of 2024. The Dot Plot predicted rates between 4.5% and 5% in the prior projection. This surprise increased the two-year USTreasury yields reached a 16-year high of 5.1973%. The news fueled a rise in the US dollar.
Expect additional volatility this Thursday, since the US’s busy calendar is not the only game in town. On Thursday, five G20 central banks will announce interest rate decisions. The most significant ones will be Scandinavia, Switzerland, the United Kingdom, and India. Expect some intriguing changes in the markets, particularly in the FX crosses, where rate decisions and demand repricing will need to be absorbed.
Daily recap: The US Dollar reigns supreme
The US dollar is rising against all major currencies at the opening of the US trading session. Certainly, all of the central banks that arrived This morning, their currency is significantly lower versus the US dollar.
Swedish Riksbank raised interest rates by 25 basis points to 4%, causing some Swedish Krona strength to ripple through in USD/SEK and EUR/SEK.
The Swiss National Bank (SNB) retained its policy rate at 1.75% despite the possibility of raising it to 2%. The Swiss franc is under pressure versus the US dollar (USD/CHF) and the euro (EUR/CHF).
The Norwegian central bank, Norges Bank, raised interest rates from 4% to 4.25%, as predicted. In USD/NOK and EUR/NOK, the Norwegian Krone gains.
The Bank of England retained its benchmark rate at 5.25%, while a rise to 5.50% was forecast. Even the unexpected increase in recent inflation data has the Bank of England divided on whether to raise. The vote came down to the wire. Out at 5-4 in favor of a halt rather than an increase. The divided decision, along with the unaltered position, causes the Pound Sterling (GBPUSD) to tumble by over 0.70%.
The employment market is booming, with initial jobless claims falling from 220,000 to 201,000. The number of people filing Continuing Claims has decreased from 1,688,000 to 1,662,000.
The Philadelphia Fed Manufacturing Survey for September was a little less upbeat, falling from 12 to -13.5. Not only is the economy declining, but it is also contracting at a far lower rate than the -1.0 predicted.
Existing Home Sales come at 14:00 GMT, with the prior index at -2.2%. There is no prediction for this release.
US Treasury will auction a 4-week bill at a much higher rate.
The US Treasury will auction a 4-week bill at a much higher rate at 15:30 GMT after theThe Fed made its decision overnight.
In a flight to safety, US Dollar equities are all in the red. It makes obvious that stocks are underperforming since higher rates mean less money pouring into equities, and funding costs are rising again as a result of the US Fed rate decision.
According to the CME Group FedWatch Tool, markets are pricing in a 68.5% possibility that the Federal Reserve will hold interest rates steady at its November meeting. The final rate increase is planned in either December or January 2024.
The benchmark 10-year US Treasury yield is 4.47%, a 15-year high. The whole US yield curve was boosted up higher after the US Dot Plot indicated that Fed officials expect rates to remain higher for a longer period of time.
