US recap: EUR/USD firms as Fed goes big with first rate cut
Sept 18 (Reuters) -The dollar index dipped briefly to a new year-to-date low after the Fed Reserve, in an 11-1 vote, lowered its policy rate by 50 basis points Wednesday to 4.75%-5.00% range, more than economists expected.
The central bank’s dot plot projections were lowered across tenors with Fed funds seen at 4.4% by the end of 2024 and 3.4% at end of 2025.
Fed Chair Jerome Powell said the labor market has cooled but that there was no sense that the committee was in a rush.
Treasury yields dipped briefly after the rate cut in a curve steepening exercise.
The pound held broad gains after a report that UK consumer inflation was unchanged from July; the central bank is seen holding policy rates steady on Thursday.
The Bank of Japan is widely expected to keep interest rates on hold at its two-day meeting ending Friday as it parses the impact of its recent rate hikes.
The U.S. House of Representatives votes Wednesday on a spending bill that will avoid an October government shutdown though tightens voting rules.
Treasury yields were up about 2-7 basis points, while the 2s-10s curve rose about 4 basis points to +8.7bp.
The S&P 500 rose 0.41%, reversing an earlier loss.
WTI fell 0.67% though EIA crude inventories unexpectedly fell in the latest week and the Biden administration said it will buy oil for the Strategic Petroleum Reserve.
Gold rose 0.60%, fueled partly by heightened Middle East risks after Hezbollah hand-held radios detonated across Lebanon.
Copper jumped 1.11% amid lower Treasury 2-year yields.
Heading toward the close: EUR/USD +0.31%, USD/JPY -0.83%, GBP/USD +0.68%, AUD/USD +0.44%, DXY -0.29%, EUR/JPY +0.79%, GBP/JPY +0.58%, AUD/JPY +0.85%.
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Editing by Burton Frierson
Robert Fullem is a Reuters market analyst. The views expressed are his own.
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