Dollar Rises Before Fed, Pound Hits Three-Month Low
The greenback strengthened against all Group-of-10 peers except the Australian dollar ahead of an expected Federal Reserve interest-rate cut.
The Bloomberg Dollar Spot Index rises 0.2% with its volatility skew little changed on the day; spot volumes beat recent averages as month-end flows and tactical positioning against them make for choppy price action, Europe-based traders say.
Yields are modestly higher across the US Treasury curve, with the 10-year at 3.99%; money markets are fully pricing a 25bp cut later Wednesday.
Trump said he expects to lower tariffs the US has imposed on Chinese goods over the fentanyl crisis and speak with China’s Xi Jinping about Nvidia Corp.’s flagship Blackwell artificial intelligence chip.
The pound and the Swiss franc lead G-10 losses; GBP/USD drops as much as 0.6% to 1.3198, lowest since Aug. 1, while EUR/GBP rises above the 0.88 handle for the first time in more than two years.
AUD/USD gains as much as 0.5% to 0.6618 to take gains into a fifth day as OIS pricing for a November Reserve Bank cut next week is stripped back to negligible.
This is the first time trimmed mean annual inflation has increased since December 2022, according to Michelle Marquardt of the Australian Bureau of Statistics.
USD/JPY declined as much as 0.4% to 151.54 on hawkish Bessent comments, before recovering to as high as 152.54, +0.3%, after Trump said he was confident of a deal with China.
“The Government’s willingness to allow the Bank of Japan policy space will be key to anchoring inflation expectations and avoiding excess exchange rate volatility,” Bessent said in a social media post Wednesday.
EUR/USD drops 0.3% to 1.1619, before halving gains.
Source: Bloomberg.com
