USD: Dollar becomes vulnerable after last Fed cut – ING

FXStreet Insights Team FXStreet

The Fed cut rates by 50bp yesterday, which came more as a surprise to economists' consensus than for markets, which had priced around a 65% probability of a half-point move. There was a substantial revision in the Dot Plot projections too, ING’s FX strategist Francesco Pesole notes.

FOMC caused volatility at the FX market

“The initial reaction in the FX market was markedly negative for the USD across the board, with the Yen (JPY), Norwegian krone (NOK) and New Zealand dollar (NZD) rallying around 1% and the Canadian dollar (CAD) unsurprisingly lagging other G10 currencies. By the time Powell’s conference had ended, those moves had been entirely unwound.”

“We have continued to observe higher FX volatility in the Asian session. After a brief overnight USD rally, we are largely back to pre-announcement levels in G10, with only JPY standing out as moderately weaker and the AUD moderately stronger following robust Australian jobs figures.”

“Ultimately, we see more room for markets to build speculative USD shorts into the US election, especially considering the USD-negative candidate (Kamala Harris) continues to fare quite well in post-debate polls.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.