Dollar Drops with Fed Path, Bank Earnings in Focus
A Bloomberg gauge of the dollar fell alongside Treasury yields as Wall Street’s largest banks continue to report healthy earnings and investors gauge the path of Federal Reserve interest-rate cuts following comments from Chair Jerome Powell. The yen touched a one-week high.
The Bloomberg Dollar Spot Index falls 0.2%, down a second day.
Powell on Tuesday “refrained from countering market expectations for rate cuts at each of the central bank’s final two meetings this year,” noted Karl Schamotta, chief market strategist at Corpay.
US 10-year yield down 2.5bps to 4.00%.
Fed speakers Wednesday include Miran, Waller and Schmid; as well as Beige Book release at 2 p.m. New York time.
Morgan Stanley and Bank of America reported earnings, supporting US stocks at the open.
Elsewhere, Treasury Secretary Scott Bessent floated a possible longer China trade truce and rare-earth compromise.
USD/JPY drops as much as 0.6% to 150.90, weakest since Oct. 7
Japan’s ruling party leader Sanae Takaichi called on the leaders of an Osaka-based opposition party to back her in a parliamentary vote to decide the prime minister expected next week.
Flows were mixed during the London session in the pair, with hedge funds split between hedging spot longs and buying outright bullish options exposure, Europe-based traders say
EUR/USD up 0.1% to 1.1623, earlier at highest since Thursday as traders gauge path for French budget
Large expiries seen at 1.1600 in €2.4b on Wednesday and €2.04b on Thursday: DTCC
Hedge funds, equity asset managers seen as supplier of EUR with real money seen as buyers at 1.1550: traders
High-beta Scandies and Aussie dollar lead G-10 gains versus USD
USD/SEK down 0.6% to 9.4780; AUD/USD up 0.4% to 0.6511
Aussie rose after Reserve Bank of Australia assistant governor Sarah Hunter said underlying inflation in the three months through September is likely to be stronger than the central bank had anticipated.
USD/CAD is little changed at 1.4043
Source : Bloomberg.com
