Forex Today: Dollar Shows No Signs of Slowing, Focus Turns to SNB and BoE

This is what you need to know to trade today Thursday September 22:

The Dollar index reached its highest level since July 2002, above 111.70, following the US Federal Reserve’s decision to raise its interest rate by 75 basis points (bp) late on Wednesday. The dollar retains its strength early on Tuesday as market participants brace for policy announcements from the Swiss National Bank (SNB) and the Bank of England (BoE). Later, the European Commission will publish consumer confidence data for September and weekly initial jobless claims will be published on the US economic docket.

Although the Fed’s 75 basis point hike was in line with market expectations, the Summary of Economic Projections showed an aggressive tilt of monetary policy. The dot plot revealed that officials’ median view of the fed funds rate at the end of 2023 rose to 4.6% from 3.8% posted in June. Additionally, policymakers see the interest rate at 3.9% by the end of 2024, up from 3.4% previously. During the press conference, FOMC Chairman Jerome Powell acknowledged that there was no “painless way” to lower inflation, but said it was difficult to know whether the US economy would enter a recession.

Fed Analysis: Powell Projects Pain, Higher Rates Longer to Keep Dollar Offered

Wall Street’s three major indices lost more than 1.5% on Wednesday and the 10-year US Treasury yield managed to hold above 3.5%. Early Thursday, US stock index futures are down between 0.25% and 0.65%.

Early in the day, the Bank of Japan (BOJ) announced that it was not changing its monetary policy, leaving the interest rate at -0.1% and maintaining the 10-year JGB yield target at 0.00%. The USD/JPY gained bullish momentum and rose to its highest level since July 1998 at 145.40 before correcting towards 145.00.

Despite the overall strength of the dollar, the USD/CHF remains relatively calm around 0.9650. The SNB is expected to raise its policy rate by 75 basis points to 0.5% from -0.25%.

SNB Forecast: Boosting the Franc? Currency war and 3 other reasons imply a massive 100 bps rally

The GBP/USD It is trading at its weakest level since 1985 below 1.1250 early Thursday. Analysts expect the BoE to raise its interest rate by 50 basis points to 2.25%, but futures market positioning suggests a 75 basis point hike is very likely. Since there will be no press conference, the vote split could affect the valuation of the British pound against its main rivals.

BoE Preview: GBP/USD braces for volatility storm, eyes 75bps rally

The EUR/USD fell to a new two-decade low early on Thursday and hovered just a step away from 0.9800. The member of the Executive Committee of the European Central Bank (ECB), Isabel Schnabel, reiterated on Thursday that interest rates must continue to rise, which supports the common currency for the time being.

Although the Prayed managed to close in positive territory on Wednesday, failed to maintain its upside momentum and turned south early on Thursday. Pressured by rising US yields, XAU/USD is trading around $1,660 at time of writing.

The Bitcoin fell towards $18,000 late on Wednesday, but recovered to the $19,000 zone early on Thursday. The ethereum it lost almost 6% and hit its lowest level since mid-July on Wednesday, near $1,200. At time of writing, ETH/USD is up 2% on the day at $1,270.