US Dollar Weakens Ahead of Fed, Aussie Strengthens
The US dollar weakened and approached a one-week low against major currencies on Wednesday, as the market became almost certain the Fed would cut interest rates by 0.25 percentage points tonight. Traders are now more focused on Jerome Powell's remarks at the press conference later. The market has already priced in a dovish scenario not only for today, but also the potential for another cut in December. This means that if Powell sounds less dovish than expected, volatility could immediately increase.
Against the Japanese yen, the US dollar fell again to around 151.84 yen. This decline occurred after US Treasury Secretary Scott Bessent signaled that the new Japanese government is now more open to a Bank of Japan interest rate hike. His comments in X stated that giving the BOJ policy space is important to contain inflation and reduce exchange rate volatility. This has led the market to think that the yen might not be allowed to weaken too much.
In Australia, the opposite is true: the Australian dollar (Aussie) strengthened. The Australian dollar rose about 0.3% to $0.6604 after third-quarter inflation data came in hotter than expected. The higher inflation has raised doubts about whether the Reserve Bank of Australia (RBA) will actually cut interest rates next week. So, while easing is the topic in the US, in Australia, inflation concerns are the talk.
Globally, market participants are also monitoring political and trade risks. US President Donald Trump will meet Chinese President Xi Jinping on Thursday in South Korea to discuss the framework for a deal that could halt new US tariffs and Chinese rare earths exports. The euro held steady at around $1.1655, while the pound edged up to $1.3278. In addition to the Fed today, the market is also awaiting the Bank of Japan on Thursday and the European Central Bank, which is expected to hold interest rates. All of this makes the foreign exchange market very sensitive to every word from central banks. (asd)
Source: Newsmaker.id
