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(New York=Yonhap Infomax) Jin Woo Choi—The US dollar strengthened for the first time in four trading days.
The US Dollar Index (DXY), which measures the greenback against six major currencies, climbed back to the 99 level following hawkish remarks from Federal Reserve Chair Jerome Powell.
The Canadian dollar initially gained after the Bank of Canada (BOC) delivered a ‘hawkish rate cut,’ but later reversed those gains as the US dollar surged in late trading.
According to Yonhap Infomax (screen number 6411), as of 16:00 Eastern Time on the 29th, the dollar-yen exchange rate stood at 152.809 yen, up 0.749 yen (0.493%) from the previous New York close of 152.060 yen.
The euro-dollar rate fell 0.00529 dollars (0.454%) to 1.15994 dollars.
The Dollar Index rose 0.455 points (0.461%) to 99.174.
The dollar saw strong upward pressure following Powell’s comments immediately after the Federal Open Market Committee (FOMC) meeting.
Chair Powell emphasized that an additional rate cut in December is “not a forgone conclusion,” adding, “far from it.”
Following Powell’s remarks, US Treasury yields extended gains, and the Dollar Index surged intraday to as high as 99.356.
The Fed cut the federal funds rate (FFR) target range by 25 basis points to 3.75–4.00% at today’s meeting. Quantitative tightening (QT), which refers to balance sheet reduction, will be suspended starting December 1.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, commented, “This reaction is a great example of how forward-looking the market is. Both the rate cut and the end of QT are positive for equities and bonds, but since the market had already priced these in, disappointment arose from the possibility that further cuts may be off the table.”
US President Donald Trump and Chinese President Xi Jinping are scheduled to hold a summit in South Korea on the 30th.
President Trump stated, “President Xi will visit tomorrow, and we hope to reach a US-China trade agreement during our meeting.”
The offshore dollar-yuan (CNH) rate rose 0.0025 yuan (0.035%) to 7.0975 yuan.
The dollar-Canadian dollar rate edged up 0.0011 Canadian dollars (0.079%) to 1.3947 Canadian dollars.
The BOC held a monetary policy meeting today and lowered its policy rate by 25 basis points from 2.50% to 2.25%, marking a second consecutive cut.
BOC Governor Tiff Macklem said, assuming the economy evolves as expected, “the current policy rate is about the right level to support an economy undergoing structural adjustment while keeping inflation near 2%.”
His comments, which suggested the rate cut cycle may be ending, initially boosted the Canadian dollar, but those gains were erased as the US dollar surged after the FOMC.
Nick Rees, Head of Macro Research at Monex Europe, explained, “The outcome was somewhat more hawkish than many expected, which led to a (temporary) rise in the Canadian dollar.”
jwchoi@yna.co.kr
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