Fed Chair Signals a Pause to Rate Cuts
Thursday 31 October, 2019
Daily Currency UpdateUSD - United States DollarIt was all eyes on the US Fed yesterday as The Federal Open Market Committee cut its main financing rate from 2% to 1.75% as widely predicted. The main talking point was that Fed Chairman, Jay Powell indicated that policy was now appropriate given economic conditions so the chances of another move lower before Christmas have dropped to around 25%. Although a reduction in chances of another cut should have strengthened the dollar, it appears the better than expected GDP figure from the States (1.9% vs exp 1.6%), a Brexit extension being agreed, and confirmation of ongoing dialogue between China and the US re: trade saw its initial move higher being reversed by better risk appetite. EUR/USD is pushing up towards 1.12 again with USD/JPY slipping back to 108.60. All eyes will now turn to the US Jobs report tomorrow with the headline Non-Farm Payroll expected to slip to 90k for October. A slight uptick in unemployment to 3.6% from 3.5% is also pencilled in.
Key MoversAcross the globe, the UK parliament announced that there would be a general election on December 12th, supporting the Great British Pound in its run-up to 1.2900 overnight. The bill flew through the House of Lords, both readings unopposed as the country goes to its first Winter election in nearly 100 years with Brexit firmly in the minds of the public.There is little happening on the data front from the Eurozone this week. Today is an important day as we wave goodbye to Mario Draghi as head of the European Central Bank. Draghi was credited with saving the Eurozone from implosion amid the debt crisis earlier this decade with his now-famous "anything it takes" speech, which signaled the start of the ECB's Quantitative Easing program. The former head of the IMF, Christine Lagarde, takes office tomorrow with her first interest rate decision/press conference due December 12th, the same day UK voters head to the polls!
- EUR/USD: 1.1141 - 1.1175 ▼
- GBP/USD: 1.2895 - 1.2975 ▼
- USD/CAD: 1.3148 - 1.3178 ▼
- AUD/USD: 0.6888 - 0.6929 ▲
- NZD/USD: 0.6385 - 0.6433 ▲