Further Greenback losses as markets tilt toward more rate cuts

The Greenback shed weight across the board after market participants stepped up bets of an additional 50 bps jumbo rate cut from the Fed in November. Markets have quickly absorbed the Fed’s first rate cut in four years, and are pivoting into hopes for more.

Here is what you need to know on Wednesday, September 25:

The US Dollar Index lost further ground on Tuesday, pushed lower by rising expectations of further double rate cuts from the Federal Reserve (Fed) in November as a follow-up to September’s 50 bps jumbo rate slash. Rate markets are now pricing in 60% odds of a second 50 bps rate cut on November 7, with the remaining 40% expecting a more reasonable 25 bps.

EUR/USD rallied heading into the midweek after kicking off the trading week with a bearish pullback. Still, the pair is getting buoyed by Greenback weakness rather than any particularly bullish Euro flows. 

GBP/USD found yet another 30-month high as the Pound Sterling rally continues unabated, but Bank of England (BoE) Monetary Policy Report Hearings due later in the week on Thursday could trip up Cable bulls.

USD/JPY eased back on Tuesday, flubbing a bullish push to try and recapture the 146.00 handle. Bank of Japan (BoJ) Governor Kazuo Ueda reiterated early Tuesday that the BoJ remains in no real rush to raise policy rates, crimping hopes for further hawkish moves from the Japanese central bank. 

AUD/USD also found a new 14-month high on Tuesday, rallying despite the Reserve Bank of Australia (RBA) keeping rates pinned on Tuesday. The RBA’s latest rate hold could prove to be poorly timed, depending on how Australia’s Monthly Consumer Price Index (CPI) prints early Wednesday.

Gold continues to grind its way higher as the Greenback falls across the board. XAU/USD is soaring toward $2,700, marking in steady day-on-day record all-time highs. Gold is up just under 30% YTD in 2024.