Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Equities, FX hit highs after Fed
Global markets pushed broadly higher on Thursday as investors reacted positively to this week’s 50-basis point rate cut from the Federal Reserve.
US shares surged overnight with the Dow Jones up 1.3%, S&P 500 up 1.8% and Nasdaq up 2.6%. The Dow and S&P 500 both struck new all-time highs.
In FX markets, the US dollar was weaker with the USD index back near 14-month lows.
The AUD/USD gained 0.7% as it traded to the highest level in 2024 so far.
The NZD/USD gained 0.5% with the pair near the 2024 highs.
In China, the USD/SGD fell 0.1% while USD/CNH lost 0.3% as it hit 16-month lows.
Bank of Japan due
The Japanese yen has been one of the strongest FX markets after the late July / early August sell-off in USD/JPY with the NZD/JPY down 5.2% over the last two months, AUD/JPY down 7.0% over the same period, and USD/JPY losing 8.6%.
Aside from the weaker US dollar as one driver, the Bank of Japan’s move to begin to raise interest rates has seen the JPY appreciate sharply.
In today’s Bank of Japan meeting, the BoJ is expected to keep rates steady after raising rates twice already this year.
However, with the BoJ expected to hike again before the end of the year, the JPY might continue to appreciate into 2025.
Euro supported ahead of consumer sentiment
In Europe, the British pound was higher as the Bank of England kept rates steady at 5.00%.
The GBP/USD hit new 30-month highs.
The euro was also higher ahead of tonight’s confidence figures. In September, we anticipate consumer confidence to remain steady at -13.4.
Consumer sentiment may be supported by the fact that gas costs have dropped and equities prices have increased, despite the September Sentix poll being worse.
The EUR/USD remains in a positive phase with the pair still above the 50 and 200-day exponential moving averages.
Greenback down, Aussie up
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 16 – 14 September
All times AEST
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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