The U.S. dollar climbed on Thursday after the Federal Reserve cut rates a day earlier but cautioned it was not necessarily the start of a cycle of monetary loosening, sending the euro to a 26-month low and the British pound to a 30-month low.
In a widely expected move, the U.S. central bank cut rates on Wednesday for the first time since the financial crisis, in response to the growing risk of higher import tariffs and a slowdown in the world’s major economies. But it also signaled that the quarter point cut was a “mid-cycle policy adjustment.” Markets took this as a sign that further rate cuts were fewer and far between, “It’s not the beginning of a long series of rate cuts,” Fed Chairman Jerome Powell said after the Fed’s decision, although he added, “I didn’t say it’s just one rate cut.”
Oil prices fell from their recent highs as concerns that sluggish economic growth will be a drag on energy demand. Meanwhile, the slow pace of U.S.-China trade negotiations has hamstrung oil markets for months, with the most recent sessions in Shanghai this week yielding little in the way of progress. Talks aren’t scheduled to resume for at least a month.
The Canadian dollar is weaker against the USD, but most of the move took place right Powell’s comments that rate cuts were a wait and see proposition, a lot of traders were going into the FED announcement with short USD positions. As a result there was a quick flattening of positions as the USD ran up against most currencies.
Currently Close Range
USDCAD 1.3198 1.3191 1.3185-1.3247
EURCAD 1.4600 1.4610 1.4582-1.4635
GBPCAD 1.6025 1.6040 1.5973-1.6057
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