The Dollar was volatile following the Federal Reserve’s in-line-with-expectations 25bp policy rate cut. Chairperson Powell during the press conference played down the likely need for a further rate cut, which saw the Dollar and US yields tick higher, but also that the hurdle for a rate hike was very high – which sent the Dollar and US yields back down. The Dollar ended the day slightly weaker but has made back some ground
today, while the S&P 500 closed at another record-high of 3,050.
Sterling and in particular the Kiwi Dollar have been amongst the main beneficiaries. A number of domestic banks have pushed back their expectations for the next RBNZ rate cut to February 2020 (from November 2018) and markets are now pricing in only a 50-50 chance of a 25bp rate cut in November compared to an 80% probability earlier this month. As a result the NZD/USD cross is up 1.1% in the past 24 hours, near the top-end of a 0.623-0.644 range in place since mid-August.
