U.S. Dollar Rises After Fed Meeting; Pound Continues Downward Momentum
Investing.com - The U.S. dollar rose on Thursday in Asia after the Federal Reserve cut its key interest rate by 25 basis points as expected, but hinted that more cuts are not guaranteed.
The U.S. Dollar Index gained 0.4% to 98.597 by 12:13 AM ET (04:13 GMT).
Fed Chair Jerome caused some confusion and eventually a huge selloff in the U.S. stock markets by first suggesting the cut might be the only cut and then saying there might be more.
In his news conference after the rate cut announcement, Powell struggled to explain the need for a cut when the domestic economy is performing well, but stressed that rising trade tensions have caused many businesses to hold off on investment decisions.
He then suggested the cut was a one-and-done, saying the rate cut was just a "mid-cycle adjustment." Then, he said there might be more cuts. At the end of the conference, he also indicated more hikes were on the table. He wouldn't say how many.
“it’s not the beginning of a long series of rate cuts,” said Powell. At the same time, he said, “I didn’t say it’s just one rate cut.”
The GBP/USD pair was down 0.3% to 1.2125. The pound continued its downward momentum as investors rushed to factor in the possibility of Britain leaving the European Union without a deal.
Britain's new prime minister Boris Johnson has vowed to pull the country out of the EU by Oct. 31, whether transitional trading agreements are in place or not.
The USD/JPY pair traded 0.4% higher to 109.18.
The AUD/USD pair and the NZD/USD pair both inched up 0.1%.
Related Articles
Dollar Bears and Trump Both Dealt Blows by Fed’s Hawkish Cut
Dollar hits two-year high vs euro as Powell rules out prolonged easing cycle
Forex - Sterling Rebounds as Dollar Flat Ahead of Expected Rate Cut
