Fed Cuts Rates Again
The US Dollar remains well bid today despite the latest rate cut form the Fed yesterday. The October FOMC saw the central bank cutting rates by a further .25% as expected. However, revelations from Powell that sentiment among policymakers was highly divided over further easing this year prevented USD from selling off in response to the cut.
Powell Highlights Mixed Views
In the post-meeting presser, Powell note that a further cut in December was not a foregone conclusion, pushing back against market pricing which was sitting around 95% ahead of the FOMC. On the back of those comments, pricing for a furtehr cut in December has dropped to around 70%. Much of this decision over future easing was based on the lack of labour market data available to the Fed amidst the ongoing US govt shutdown. With the Fed unable to get a proper read on whether labour market conditions have deteriorated further, many members felt unable to commit to furtehr easing. With this perspective now on the table, USD looks unlikely to move lower near-term as traders eye a December cut with uncertainty.
US/China Trade Deal
Alongside a less dovish tone from the Fed, USD is also being supported by positive news on the US/China trade front. Following a meeting in Korea yesterday, Trump and announced a deal on tariffs and rare earths access for the US. The current suspension of trade tariffs, due to end on Nov 10th, will now be extended for another year in exchange for China agreeing to crackdown on the fentanyl trade and resuming purchases of US soybeans.
Technical Views
DXY
The index is once again testing the 99.15 level following a solid rally of the broken bear channel highs. If bulls can break above this level focus will be on a test of the 100.38 market next and the summer highs. To the downside, 98.24 remains key support to watch with the bull view only shifting on a break below that level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.