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Currency Market Analysis

Jun 26, 2019 | Currency Market Analysis

Global Themes

USD rebounds as Fed tempers cut talk

The US dollar rebounded overnight as a pick-up in volatility unsettled markets after major speech from the US Federal Reserve chairman Jerome Powell.

Powell indicated the Fed would cut rates if required but also noted that US economy, on balance, remains strong.

Powell said: “Many FOMC participants judge that the case for somewhat more accommodative policy has strengthened. But we are also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment.”

Additionally, in other speech, St Louis Fed president James Bullard, who is typically seen as more prepared to cut rates, suggested the Fed won’t consider a 50-basis point cut saying "I don't think we have to take huge action…this is more in the realm of insurance.”

Safe havens

The USDSGD climbed 0.2% as it lifted from two-month lows.

The Japanese yen and Swiss franc both outperformed overnight with geopolitical tensions between the US and Iran causing investors to focus on safe haven currencies.

RBNZ ahead

Today’s major regional announcement comes from the Reserve Bank of New Zealand and they meet for their six-weekly interest rate decision.

The market sees a 30% chance of a decrease after the RBNZ cut official interest rates at their last meeting for the first time in three years.

The RBNZ announcement is due at 10am.


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