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Fed Decision Looms: Dollar Up, Gold Down After Trump Trades
Traders react to Trump’s victory and expectations of rate cuts as focus shifts to fed guidance
Rate Cut Expectations: A strong September jobs report reduced rate cut expectations, though October's weaker report raised some doubts.
Dollar Steady: The dollar hovers near a four-month high, bolstered by Trump’s pro-growth policies after his recent victory.
USD/JPY Surge: Dollar climbs to 154.7 yen, nearing intervention levels; Japan signals close monitoring of speculative moves.
Rate Cut Pending
Investors are focused on the conclusion of today’s Federal Reserve meeting, where a 25-basis-point interest rate cut is expected. Market attention is primarily on the Fed’s forward guidance, especially as it navigates the inflationary pressures anticipated under Trump’s presidency.
A stronger-than-expected jobs report in September prompted investors to scale back their expectations for additional Fed rate cuts. However, a softer October report, affected by recent hurricanes and labor strikes, has cast some doubt on this outlook.
Dollar Steadies at 4-Month High
The dollar index held firm near a four-month peak, with minor declines in Asian trading, following a surge after Donald Trump’s election victory.
Expectations for growth-driven inflation under Trump’s trade, tax, and immigration policies have bolstered the greenback. Trump’s win over Democrat Kamala Harris also secured a Republican Senate majority, with House control still uncertain but leaning Republican.
USD/JPY Climbs
The dollar advanced 1.92% against the yen, reaching 154.7—the highest since July 30. This brings the yen closer to levels that previously led to government intervention. Japan’s Chief Cabinet Secretary Yoshimasa Hayashi underscored the government’s increased vigilance on currency movements, particularly against speculative trades, signaling a heightened urgency.
Gold
Gold prices edged down in Asian trading on Thursday, extending steep losses following Donald Trump’s victory in the 2024 elections, which fueled a rally in the dollar and risk assets. Profit-taking also weighed on the yellow metal, as it had recently reached record highs leading up to the election. Despite recent declines, gold still holds much of its gains from the past month.
Spot gold dipped to $2,658.03 an ounce, while December gold futures slid 0.4% to $2,664.70
