- The US dollar index fell some points after the last decision of the FED rates and the update of the points graph.
- The FOMC still foresees 50 basic points in cuts in 2025, but the uncertainty in politics has expanded the range of points.
The US dollar index (DXY) experienced volatile movements on Wednesday after the Federal Open Market Committee (FOMC) of the Federal Reserve (FED) maintained interest rates without changes, as investors had expected in general. The dollar continues to move in an average long -tailed range near the 98.60 region while the operators wait for the next press conference of the FED president, Jerome Powell, and the subsequent question and answer session.
The Fed still foresees an average of 50 basic points in interest rate cuts by the end of the year, closely following what is incorporated according to the Fedwatch tool of the CME; However, the continuous uncertainty in commercial policy has expanded the rank of rates expectations of those responsible for the policy, with some members of the Fed seeing higher rates at the end of the year compared to the previous summary of economic projections (SEP).
More to come …
Market reaction
The US dollar index is slightly below after the FOMC rates and the points graph update. The positioning of the US dollar in general is largely remained unchanged in the day while investors expect the press conference of President Powell and the next question and answers session.
5 -minute graph of the dollar index
Fed Faqs
The monetary policy of the United States is directed by the Federal Reserve (FED). The Fed has two mandates: to achieve prices stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the objective of 2% set by the Federal Reserve, it rises interest rates, increasing the costs of loans throughout the economy. This translates into a strengthening of the US dollar (USD), since it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to foster indebtedness, which weighs on the green ticket.
The Federal Reserve (FED) celebrates eight meetings per year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve officials of the Federal Reserve: the seven members of the Council of Governors, the president of the Bank of the Federal Reserve of New York and four of the eleven presidents of the regional banks of the Reserve, who exercise their positions for a year in a rotary form.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was the weapon chosen by the Fed during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy high quality bonds of financial institutions. The one usually weakens the US dollar.
The quantitative hardening (QT) is the inverse process to the QE, for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the bonds that it has in portfolio that they expire, to buy new bonds. It is usually positive for the value of the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
