USD: Dollar becomes vulnerable after last Fed cut – ING
19.09.2024, 08:43

USD: Dollar becomes vulnerable after last Fed cut – ING

The Fed cut rates by 50bp yesterday, which came more as a surprise to economists' consensus than for markets, which had priced around a 65% probability of a half-point move. There was a substantial revision in the Dot Plot projections too, ING’s FX strategist Francesco Pesole notes.

FOMC caused volatility at the FX market

“The initial reaction in the FX market was markedly negative for the USD across the board, with the Yen (JPY), Norwegian krone (NOK) and New Zealand dollar (NZD) rallying around 1% and the Canadian dollar (CAD) unsurprisingly lagging other G10 currencies. By the time Powell’s conference had ended, those moves had been entirely unwound.”

“We have continued to observe higher FX volatility in the Asian session. After a brief overnight USD rally, we are largely back to pre-announcement levels in G10, with only JPY standing out as moderately weaker and the AUD moderately stronger following robust Australian jobs figures.”

“Ultimately, we see more room for markets to build speculative USD shorts into the US election, especially considering the USD-negative candidate (Kamala Harris) continues to fare quite well in post-debate polls.”

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