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Equities rose ahead of the Federal Reserve’s announcement and gained further afterward, with the S&P 500 climbing 2.0%. The yield on the US 10-year decreased by 5 bps to 4.09%. The dollar index (DXY) weakened below 104 in anticipation of the FOMC meeting’s outcome. Although the DXY initially rose following the Fed’s pause, it continued to decline as US bond yields dropped.
The Federal Reserve left its policy rate unchanged as expected. While the committee didn’t explicitly signal a rate cut for September, it noted progress toward its goals. In a later press conference, Chair Powell mentioned that a rate cut could be possible by September “if we get the data that we hope we get”. Although this wasn’t as clear a signal as the markets had hoped for, it was a strong hint. The FOMC noted that “inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2% objective,” which keeps the possibility of a September cut alive.
Key changes in the statement compared to June include:
- “Job gains have moderated” instead of “remained strong.”
- “Unemployment rate has moved up but remains low” instead of “unemployment rate has remained low.”
- “Employment and inflation goals continue to move into better balance” instead of “employment and inflation goals have moved toward better balance over the past year.”
The latest ADP employment report from the US revealed another soft performance, with 122,000 job gains compared to 155,000 the previous month, highlighting a slowdown in both employment and pay growth.
The USD is generally weaker against G10 currencies.
Economic Data
• AU – Jun. Trade Balance
• CN – Jul. Caixin Chine PMI Mfg
• EU – Jun. Unemployment Rate
• UK – Aug-01. Bank if England Rate
• UK – BOE Governor Andrew Bailey press conference
• US – Jul 27. Initial Jobless Claims
• US – Q2 P. Nonfarm Productivity
• CA – Jul. S&P Global Canada Manufacturing PMI
• US – Jun. Construction Spending m/m
• US – Jul. ISM Manufacturing
• UK – BOE’s Huw Pill
• If you see a horse, wish it happy birthday
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6548 |
| AUD/NZD | 1.0996 |
| AUD/JPY | 99.24 |
| AUD/CNY | 4.7312 |
| AUD/EUR | 0.6048 |
| AUD/GBP | 0.5039 |
AUD/USD 24 Hour
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