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FOMC Passed with Limited USD Rebound; Focus Shifts to BOE Policy Decision

πŸ’± FOMC Passed with Limited USD Rebound; Focus Shifts to BOE Policy Decision

🏦 FOMC Outcome & Market Reaction

  • The Federal Reserve delivered a 25bp rate cut, fully in line with expectations.

  • The dot plot signaled two more cuts by year-end, matching market consensus.

  • Chair Powell emphasized a balanced focus on employment and inflation, maintaining caution on price pressures.

  • While the USD initially rebounded, the Dollar Index remains below its 10-day moving average, and the broader September USD downtrend is intact.

πŸ‡¬πŸ‡§ Spotlight on the Bank of England

  • The BOE’s Monetary Policy Committee decision is due today.

  • Markets expect a hold, with a 7–2 vote split, as two members are likely to favor a rate cut.

  • The UK economy continues to face low growth + high inflation (stagflation risks). CPI remains elevated at +3.8% YoY, while fiscal uncertainty ahead of the autumn budget adds pressure.

  • With no new forecasts or Governor’s press conference scheduled, market stability may be short-lived.

🌍 Global Economic Events
Europe & EM:

  • Eurozone Current Account (July)

  • Eurozone Construction Output (July)

  • Norges Bank expected to cut –25bp

  • SARB expected to hold rates

United States:

  • Weekly Jobless Claims (Sept 7–13)

  • Philadelphia Fed Business Outlook (Sept)

  • Leading Index (Aug)

  • TIC Data (July)

  • $19bn 10-year TIPS Auction

Key Speeches:

  • ECB’s Lagarde, Nagel, and de Guindos

Oceania FX:

  • NZD: Q2 GDP fell –0.9% QoQ (vs –0.3% expected) β†’ fueling speculation of an RBNZ –50bp cut in October. NZD sold off sharply.

  • AUD: August jobs data showed over 40k full-time job losses β†’ softer outlook and renewed rate cut bets. AUD remains weak vs USD but strong against NZD, with AUD/NZD hitting 1.1244 in London trade.

πŸ“‰ Dollar Index (DXY)

  • Dipped to 96.58 in Tokyo, then rebounded to 96.84 in London.

  • Still near multi-month lows but showing early signs of stabilization.

πŸ’Ή Key FX Ranges (Near-Term Outlook)

Pair Support Resistance Comment
USD/JPY 146.50 148.80 Post-FOMC dollar weakness persists; 147 zone attracts selling. Intervention risk above 149–150.
EUR/USD 1.1650 1.1800 ECB on hold but euro remains resilient; dovish Fed could see 1.18 break.
GBP/USD 1.3450 1.3620 CPI stickiness provides support, but MPC vote split may drive volatility.
GBP/JPY 198.00 200.50 Gilt yields steer direction; tests above 200 attract cautious buying.
AUD/JPY 96.00 98.00 Weak jobs data β†’ sell rallies; swings tied to US/Japan events.
NZD/JPY 85.00 87.00 GDP slump fuels RBNZ cut bets; sell-on-rally bias.
CAD/JPY 105.50 108.50 Driven by CPI & BoC decision; bias toward selling rallies.
XAU/USD 3520 3620 USD weakness + falling yields lift gold; buy dips near 3520–3550.

πŸ“ Additional Notes

  • USD/JPY: 149–150 remains a key intervention risk zone, limiting upside.

  • EUR/USD: Supported by ECB–Fed divergence; euro retains relative strength vs USD.

  • GBP: Focus on MPC vote split; an increase in dovish votes could weigh heavily.

  • Gold: Correlating with DXY weakness; 3520–3550 is key support for dip buyers.

βœ… Summary:

  • USD rebound post-FOMC is limited; broader dollar downtrend remains intact.

  • GBP focus on BOE decision; volatility risk high depending on vote split.

  • AUD & NZD weak on data, though AUD stronger relative to NZD.

  • Gold supported by dollar softness + lower yields, near key breakout levels.

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