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US Federal Reserve
News and Analysis of Events and Decisions Made at the US Federal Reserve (the US Fed)
The Dollar strengthened after the Federal Reserve raised interest rates by 50 basis points and lifted its projections of where it expects interest rates to settle at the end of the hiking cycle in 2023.
Pandemic period gains for stock markets and the resulting windfalls for investors have been cited by Federal Reserve (Fed) Chairman Jerome Powell for a sharp increase in retirements that is lifting pay growth for workers but also contributing to inflation and helping to drive interest rates higher.
Federal Reserve (Fed) policymakers were far from uninanimous in their views on how much further interest rates may need to rise in November and recent data has done little to suggest that would have changed since this month's meeting, though analysts at ING say it's too early to count the U.S. Dollar out.
The Euro to Dollar rate has reversed much of its October recovery in recent trade with the help of a Federal Reserve (Fed) that has quashed market speculation about a dovish pivot or softening of the U.S. interest rate stance and left the outlook for the single currency hanging in the balance.
The Dollar strengthened in the hours following another large U.S. interest rate hike and a clear message from Chair Jerome Powell that further hikes were necessary to bring inflation lower.
The Pound to Dollar exchange rate remained buoyant near the week's highs after the Federal Reserve's (Fed) preferred measure of inflation underwhelmed expectations and did nothing to persuade the market into bidding afresh for the greenback ahead of next Wednesday's interest rate decision.
The Pound to Dollar exchange rate surged into the London close on Friday amid a spectacular rally from the Japanese Yen that appeared to drive a market-wide slump in Dollar exchange rates and was followed by reports of direct intervention from the government in Tokyo and Bank of Japan (BoJ).
The Euro did better than many others even as it fell to an October low against the Dollar after official data showed U.S. inflation accelerating further in September, inciting a sharp rally in government bond yields and bringing Federal Reserve (Fed) interest rate policy back into focus for the market.
The Federal Reserve (Fed) has an expanded array of tools with which it could fix fractures in the financial system should its interest rate policy lead things to break and the mere existence of some of those tools has likely already acted as a stabilising force, according to Governor Christopher Waller.
The Pound to Dollar rate climbed back above 1.14 to extend a six-day recovery as U.S. exchange rates eased across the board following the release of data suggesting the number of U.S. job vacancies fell sharply in August.
U.S. interest rates were raised by three quarters of a percentage point for a third consecutive occasion in September while the Federal Reserve (Fed) also lifted its forecasts to suggest that significant further increases are still likely up ahead, with the Fed Funds rate seen rising above 4.5% at some time next year.
The Pound rallied as the Dollar slipped from new highs ahead of the weekend and after a University of Michigan (UoM) survey suggested U.S. consumers' expectations of short and medium-term inflation ebbed in September, although that might not be the most important detail of the survey.
The U.S. Dollar rally of 2022 may be in its final throes and in part because there's a risk of either a Volckerian Federal Reserve (Fed) decision next Wednesday or of a market disappointment with the outcome, and each could be enough to see 2022’s Dollar rush turning into a great U.S. Dollar flush.
The Japanese Yen was slipping again in the penultimate session of the week but recent speculation about the prospect of direct intervention by the Bank of Japan (BoJ) to support the currency is not the only reason why the Yen may already have bottomed and could be on the cusp of a spectacular recovery.
The latest data have vanquished hopes that U.S. inflation may be easing and are widely expected to have caused concern at the Federal Reserve barely a week out from September's interest rate decision, leading many analysts and economists to anticipate some of the strongest action yet from the Fed.
The Euro to Dollar rate sustained heavy losses after sharp increases in some U.S. inflation rates took the market by surprise but its earlier recovery from two-decade lows may have been merely delayed, rather than derailed, and in part because of the evolving Federal Reserve (Fed) policy outlook.
The Japanese Yen's annual loss reached extreme levels at times this week, drawing increasingly stern protests from the Ministry of Finance, but there is a danger that market speculators driving this are unwittingly engaging themselves in a game of Russian roulette with lots of loaded chambers in the pistol.