US Dollar Rallies to Fresh Yearly Highs as Fed Cuts Rates by 25-bps

Fed Rate Cut Talking Points:

  • The FOMC cut a categorical seductiveness rate currently from 2.25-2.50% to 2.00-2.25%; rates markets were pricing in a 100% possibility of a 25-bps currently and an 18% possibility of a 50-bps cut.
  • The Jul Fed assembly also suggested that a FOMC will stop a circuitous down of a change piece on Aug 1 – effectively finale what was famous as “qualitative tightening,” or QT.
  • The Fed’s process matter done transparent that it will continue to guard outmost risks, radically observant that if a US-China trade fight rages, a FOMC will be in easing mode.

Looking for longer-term forecasts on a US Dollar? Check out a DailyFX Trading Guides.

The Federal Reserve has answered marketplace participants’ calls for some-more dovish policy. The Jul Fed assembly strictly outlines a finish of a rate travel cycle that began in Dec 2015, with a initial of potentially several 25-bps rate cuts entrance down a tube today. The FOMC cut a categorical seductiveness rate currently from 2.25-2.50% to 2.00-2.25%; rates markets were pricing in a 1000% possibility of a 25-bps currently and an 18% possibility of a 50-bps cut.

US-China Trade War on Powell’s Mind

The Fed’s process matter done transparent that it will continue to guard outmost risks, radically observant that if a US-China trade fight rages, a FOMC will be in easing mode. “This movement supports a Committee’s perspective that postulated enlargement of mercantile activity, clever labor marketplace conditions, and acceleration nearby a Committee’s symmetric 2 percent design are a many expected outcomes, though uncertainties about this opinion remain.

“This comment will take into comment a far-reaching operation of information, including measures of labor marketplace conditions, indicators of acceleration pressures and acceleration expectations, and readings on financial and general developments.” International developments don’t usually meant a US-China trade war: concerns about tellurian appetite reserve given geopolitical tensions around Iran and a Strait of Hormuz; and who can forget about Brexit?

The Jul Fed assembly also suggested that a FOMC will stop a circuitous down of a change piece on Aug 1 – effectively finale what was famous as ‘qualitative tightening,’ or QT.

Not a Unanimous Decision

Voting for a 25-bps rate cut currently were Fed Chair Powell, Fed Vice Chair Williams, and house members Bowman, Brainard, Bullard, Clarida, Evans, and Quarles. Voting opposite a movement were George and Rosengren, who elite to keep rates on hold. This voting relapse is assisting surprise marketplace participants that their expectations for a 50-bps rate cut were overblown; a dissenters didn’t wish to cut during all.

In turn, a voting relapse suggests that a FOMC isn’t as dovish as formerly thought. In response, seductiveness rate markets have started to bonus reduce contingency of additional rate cuts in 2019. To wit: before to a Jul Fed meeting, there was a 76% possibility of a second 25-bps rate cut in Sep and a 56% possibility of a third 25-bps rate cut in December; after a Jul Fed meeting, there is a 67% possibility of a second 25-bps rate cut in Sep and a 50% possibility of a third 25-bps rate cut in December.

As we’ve been indicating out for several weeks (including many recently, yesterday), receding Fed rate cut contingency are useful for a US Dollar (via a DXY Index). Today, with rate cut contingency holding a step back, a US Dollar has been means to convene to uninformed yearly highs.

DXY INDEX TECHNICAL ANALYSIS: DAILY PRICE CHART (APRIL TO JULY 2019) (CHART 1)

US Dollar Rallies to Fresh Yearly Highs as Fed Cuts Rates by 25-bps

Following a Jul Fed meeting, a US Dollar rallied to a uninformed yearly high, with a DXY Index eclipsing a May high set during 98.37, substantiating a new high year-to-date during 98.42. A tighten during 98.42 or above would not usually paint a top tighten of a year, though it would come alongside a pierce behind above a rising trendline from a Feb 2018 and Mar 2019 lows in a form of a bullish outward engulfing bar candle.

Fed Chair Jerome Powell’s press discussion starts during 14:30 EDT/18:30 GMT. Follow along in real-time in a DailyFX Real Time News feed.

FX TRADING RESOURCES

Whether we are a new or gifted trader, DailyFX has mixed resources accessible to assistance you: an indicator for monitoring trader sentiment; quarterly trading forecasts; methodical and educational webinars hold daily; trade guides to assistance we improve trade performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To hit Christopher, email him during cvecchio@dailyfx.com

Follow him in a DailyFX Real Time News feed and Twitter during @CVecchioFX

US Dollar Rallies to Fresh Yearly Highs as Fed Cuts Rates by 25-bps

Fed Rate Cut Talking Points:

  • The FOMC cut a categorical seductiveness rate currently from 2.25-2.50% to 2.00-2.25%; rates markets were pricing in a 100% possibility of a 25-bps currently and an 18% possibility of a 50-bps cut.
  • The Jul Fed assembly also suggested that a FOMC will stop a circuitous down of a change piece on Aug 1 – effectively finale what was famous as “qualitative tightening,” or QT.
  • The Fed’s process matter done transparent that it will continue to guard outmost risks, radically observant that if a US-China trade fight rages, a FOMC will be in easing mode.

Looking for longer-term forecasts on a US Dollar? Check out a DailyFX Trading Guides.

The Federal Reserve has answered marketplace participants’ calls for some-more dovish policy. The Jul Fed assembly strictly outlines a finish of a rate travel cycle that began in Dec 2015, with a initial of potentially several 25-bps rate cuts entrance down a tube today. The FOMC cut a categorical seductiveness rate currently from 2.25-2.50% to 2.00-2.25%; rates markets were pricing in a 1000% possibility of a 25-bps currently and an 18% possibility of a 50-bps cut.

US-China Trade War on Powell’s Mind

The Fed’s process matter done transparent that it will continue to guard outmost risks, radically observant that if a US-China trade fight rages, a FOMC will be in easing mode. “This movement supports a Committee’s perspective that postulated enlargement of mercantile activity, clever labor marketplace conditions, and acceleration nearby a Committee’s symmetric 2 percent design are a many expected outcomes, though uncertainties about this opinion remain.

“This comment will take into comment a far-reaching operation of information, including measures of labor marketplace conditions, indicators of acceleration pressures and acceleration expectations, and readings on financial and general developments.” International developments don’t usually meant a US-China trade war: concerns about tellurian appetite reserve given geopolitical tensions around Iran and a Strait of Hormuz; and who can forget about Brexit?

The Jul Fed assembly also suggested that a FOMC will stop a circuitous down of a change piece on Aug 1 – effectively finale what was famous as ‘qualitative tightening,’ or QT.

Not a Unanimous Decision

Voting for a 25-bps rate cut currently were Fed Chair Powell, Fed Vice Chair Williams, and house members Bowman, Brainard, Bullard, Clarida, Evans, and Quarles. Voting opposite a movement were George and Rosengren, who elite to keep rates on hold. This voting relapse is assisting surprise marketplace participants that their expectations for a 50-bps rate cut were overblown; a dissenters didn’t wish to cut during all.

In turn, a voting relapse suggests that a FOMC isn’t as dovish as formerly thought. In response, seductiveness rate markets have started to bonus reduce contingency of additional rate cuts in 2019. To wit: before to a Jul Fed meeting, there was a 76% possibility of a second 25-bps rate cut in Sep and a 56% possibility of a third 25-bps rate cut in December; after a Jul Fed meeting, there is a 67% possibility of a second 25-bps rate cut in Sep and a 50% possibility of a third 25-bps rate cut in December.

As we’ve been indicating out for several weeks (including many recently, yesterday), receding Fed rate cut contingency are useful for a US Dollar (via a DXY Index). Today, with rate cut contingency holding a step back, a US Dollar has been means to convene to uninformed yearly highs.

DXY INDEX TECHNICAL ANALYSIS: DAILY PRICE CHART (APRIL TO JULY 2019) (CHART 1)

US Dollar Rallies to Fresh Yearly Highs as Fed Cuts Rates by 25-bps

Following a Jul Fed meeting, a US Dollar rallied to a uninformed yearly high, with a DXY Index eclipsing a May high set during 98.37, substantiating a new high year-to-date during 98.42. A tighten during 98.42 or above would not usually paint a top tighten of a year, though it would come alongside a pierce behind above a rising trendline from a Feb 2018 and Mar 2019 lows in a form of a bullish outward engulfing bar candle.

Fed Chair Jerome Powell’s press discussion starts during 14:30 EDT/18:30 GMT. Follow along in real-time in a DailyFX Real Time News feed.

FX TRADING RESOURCES

Whether we are a new or gifted trader, DailyFX has mixed resources accessible to assistance you: an indicator for monitoring trader sentiment; quarterly trading forecasts; methodical and educational webinars hold daily; trade guides to assistance we improve trade performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To hit Christopher, email him during cvecchio@dailyfx.com

Follow him in a DailyFX Real Time News feed and Twitter during @CVecchioFX

Dow Jones, Nasdaq 100, S&P 500 Price Action Setups Post FOMC

Dow Jones, Nasdaq 100, SP 500 Outlook:

  • The Fed press discussion saw a Dow Jones dump scarcely 500 points before clarifying remarks assisted a liberation to 26,860
  • Simultaneously, a VIX peaked a 16.5 to strike a top turn given Jun 26 as traders repositioned
  • Check out a weekly elemental foresee for a Dow Jones, Nasdaq 100, SP 500, DAX 30 and FTSE 100.

Dow Jones, Nasdaq 100, SP 500 Price Action Setups Post FOMC

A array of comparatively hawkish comments from Fed Chairman Jerome Powell followed an approaching 25-basis indicate cut to a Federal Funds rate Wednesday, sparking a brief selloff opposite US equity markets. During a press conference, a Dow Jones momentarily sank 500 points before resilient somewhat. Rolling into a close, waste were widespread with a Dow Jones down -1.2% contra a -1.1% and -1.3% waste for a SP 500 and Nasdaq 100 respectively. As a dirt settles, marketplace participants will now have to confirm either a new financial process opinion constitutes trend delay aloft or an prolongation of Wednesday’s bearish reaction.

Dow Jones Price Chart: 2 – Hour Time Frame (June – July) (Chart 1)

dow jones cost draft fed meeting

Chart combined in TradingView

Either way, a Dow Jones exhibited confluence to mixed technical levels in a eventuality that suggests they will continue to change a DJIA in a entrance days. In a eventuality bonds continue lower, a Dow might demeanour for support circuitously a descending trendline from Feb and a 26,698 turn – April’s pitch high. Should both levels falter, successive support is comparatively meagre until a 26,000 area. Conversely, a miscarry aloft will have to overcome a dual levels that have kept a Index contained adult to this point. That insurgency is noted by dual descending trendlines of varying slopes during a 27,400 and 27,550 levels

Nasdaq 100 Price Chart: 2 – Hour Time Frame (June – July) (Chart 2)

nasdaq 100 cost draft fed meeting

Chart combined in TradingView

The Nasdaq 100 also displayed a courtesy for technical change by shutting during before all-time highs around 7,850. Critically, however, a tech-heavy Index slipped underneath dual trendlines that formerly acted as support. Moving forward, a dual technical levels will now demeanour to conflict any attempted miscarry by a Nasdaq. For some-more updates and research on a building cost action, follow @PeterHanksFX on Twitter.

Sign adult for a Weekly Equity Outlook Webinar to benefit gain discernment and batch marketplace research by a lens of tellurian macroeconomic trends and financial policy.

On a other hand, a delay of Wednesday’s pierce reduce in Thursday trade could start to accelerate given a miss of circuitously technical support. Further, a array of unoccupied gaps from cost movement that developed in Jun could intensify any declines. With that in mind, 7,700 is an critical turn to watch as it expected possesses a jot of buoyance and could frustrate an try to fill a gaps down to a 7,400 level.

SP 500 Price Chart: 2 – Hour Time Frame (June – July) (Chart 3)

SP 500 cost draft fed meeting

Chart combined in TradingView

While technical change was displayed opposite US equities, maybe a cleanest cost movement was witnessed on a SP 500. Relatively hawkish remarks sent a Index down to a 2,960 turn quickly, that outlines 4 before highs in Sep and Oct of 2018 along with a high in May 2019 and a pitch high in a center of June.

Evidently, a turn carries poignant technical consequence and will demeanour to poise a initial section of support in a renewed try lower. A crack underneath could open a doorway to serve waste as a technical substructure becomes unsteady. Should bearishness continue underneath 2,960, a descending trendline from late Dec will demeanour to keep a SP 500 afloat – as it did for a DAX 30. To a topside, initial insurgency will expected be offering during a 3,000 psychological turn before a Index could demeanour to plea a descending trendline that stalled cost progressing this week around 3,040.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:Bitcoin Price Chart is Coiled like a Spring, will it Bounce or Break?

Dow Jones, Nasdaq 100, S&P 500 Price Action Setups Post FOMC

Dow Jones, Nasdaq 100, SP 500 Outlook:

  • The Fed press discussion saw a Dow Jones dump scarcely 500 points before clarifying remarks assisted a liberation to 26,860
  • Simultaneously, a VIX peaked a 16.5 to strike a top turn given Jun 26 as traders repositioned
  • Check out a weekly elemental foresee for a Dow Jones, Nasdaq 100, SP 500, DAX 30 and FTSE 100.

Dow Jones, Nasdaq 100, SP 500 Price Action Setups Post FOMC

A array of comparatively hawkish comments from Fed Chairman Jerome Powell followed an approaching 25-basis indicate cut to a Federal Funds rate Wednesday, sparking a brief selloff opposite US equity markets. During a press conference, a Dow Jones momentarily sank 500 points before resilient somewhat. Rolling into a close, waste were widespread with a Dow Jones down -1.2% contra a -1.1% and -1.3% waste for a SP 500 and Nasdaq 100 respectively. As a dirt settles, marketplace participants will now have to confirm either a new financial process opinion constitutes trend delay aloft or an prolongation of Wednesday’s bearish reaction.

Dow Jones Price Chart: 2 – Hour Time Frame (June – July) (Chart 1)

dow jones cost draft fed meeting

Chart combined in TradingView

Either way, a Dow Jones exhibited confluence to mixed technical levels in a eventuality that suggests they will continue to change a DJIA in a entrance days. In a eventuality bonds continue lower, a Dow might demeanour for support circuitously a descending trendline from Feb and a 26,698 turn – April’s pitch high. Should both levels falter, successive support is comparatively meagre until a 26,000 area. Conversely, a miscarry aloft will have to overcome a dual levels that have kept a Index contained adult to this point. That insurgency is noted by dual descending trendlines of varying slopes during a 27,400 and 27,550 levels

Nasdaq 100 Price Chart: 2 – Hour Time Frame (June – July) (Chart 2)

nasdaq 100 cost draft fed meeting

Chart combined in TradingView

The Nasdaq 100 also displayed a courtesy for technical change by shutting during before all-time highs around 7,850. Critically, however, a tech-heavy Index slipped underneath dual trendlines that formerly acted as support. Moving forward, a dual technical levels will now demeanour to conflict any attempted miscarry by a Nasdaq. For some-more updates and research on a building cost action, follow @PeterHanksFX on Twitter.

Sign adult for a Weekly Equity Outlook Webinar to benefit gain discernment and batch marketplace research by a lens of tellurian macroeconomic trends and financial policy.

On a other hand, a delay of Wednesday’s pierce reduce in Thursday trade could start to accelerate given a miss of circuitously technical support. Further, a array of unoccupied gaps from cost movement that developed in Jun could intensify any declines. With that in mind, 7,700 is an critical turn to watch as it expected possesses a jot of buoyance and could frustrate an try to fill a gaps down to a 7,400 level.

SP 500 Price Chart: 2 – Hour Time Frame (June – July) (Chart 3)

SP 500 cost draft fed meeting

Chart combined in TradingView

While technical change was displayed opposite US equities, maybe a cleanest cost movement was witnessed on a SP 500. Relatively hawkish remarks sent a Index down to a 2,960 turn quickly, that outlines 4 before highs in Sep and Oct of 2018 along with a high in May 2019 and a pitch high in a center of June.

Evidently, a turn carries poignant technical consequence and will demeanour to poise a initial section of support in a renewed try lower. A crack underneath could open a doorway to serve waste as a technical substructure becomes unsteady. Should bearishness continue underneath 2,960, a descending trendline from late Dec will demeanour to keep a SP 500 afloat – as it did for a DAX 30. To a topside, initial insurgency will expected be offering during a 3,000 psychological turn before a Index could demeanour to plea a descending trendline that stalled cost progressing this week around 3,040.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:Bitcoin Price Chart is Coiled like a Spring, will it Bounce or Break?

US Dollar Price Action Eyes BOE, PMI Data Post-Fed Rate Cut

US DOLLAR TURNS TO MANUFACTURING PMI DATA, BOE

  • The Federal Reserve (Fed) only suggested a initial rate cut given embarking on a hiking cycle that began Dec 2015
  • US Dollar cost movement will approaching take cues for a subsequent instruction from a BOE and production PMI reports out of China, Canada and a US
  • Download a giveaway DailyFX Q3 USD Forecast for in-depth technical and elemental outlook

Now that a July Fed meeting is in a rearview mirror, traders will approaching spin to high-impact mercantile events and information releases slated for Thursday’s event with a August BOE meeting in serve to production PMI readings out of China, a US and Canada.

Seeing that mark GBPUSD will be customarily impacted by a Bank of England’s financial process refurbish and Governor Carney’s follow adult explanation – quite in propinquity to a UK economy and a latest Brexit developments – US Dollar opening over a brief tenure competence be improved celebrated around mark AUDUSD and mark USDCAD.

FOREX ECONOMIC CALENDAR HIGHLIGHTS GBPUSD, AUDUSD, USDCAD

AUDUSD GBPUSD USDCAD Forex Economic Calendar Chart

Check out a extensive forex mercantile calendar for a full list of arriving events and information releases!

Overarchingly, Chair Powell voiced a neutral position in courtesy to destiny monetary process decisions with today’s movement to reduce rates noticed as an ‘insurance move’ to strengthen opposite downside risks and keep ancillary a mercantile expansion. Despite a FOMC still saying a certain baseline outlook, downside risks sojourn primarily around negligence tellurian GDP, trade fight doubt and debility opposite a production industry.

US Economic Surprise Index and DXY US Dollar Index Price Chart

US Fed Chair Powell also settled that a latest FOMC rate cut was a “mid-cycle adjustment” and that Wednesday’s preference to reduce seductiveness rates by 25 basement points “differs from a start of a extensive slicing cycle.” In light of a latest Fed process decision, it stays peerless to watch incoming mercantile information closely for intensity discernment on how a US executive bank competence respond to mercantile developments down a road.

As such, Thursday’s recover of a Caixin China Manufacturing PMI, RBC Canada Manufacturing PMI and ISM US Manufacturing PMI reports will approaching be scrutinized for signs of a miscarry or serve decrease opposite this sector. Yet, it is value mentioning that a some-more sanguinary tinge conveyed by Powell – relations to a augmenting dovishness over a final few Fed meetings and other executive banks – poses as a bullish awaiting for a US Dollar.

SPOT AUDUSD PRICE CHART: DAILY TIME FRAME (MARCH 26, 2019 TO JULY 31, 2019)

Spot AUDUSD cost chart

Seeing that China is Australia’s largest trade partner, a Australian Dollar stands to be impacted by a recover of a Caixin Chinese production PMI report. If a information comes in hotter than expected, mark AUDUSD could scratch behind some of Wednesday’s downside. Conversely, a unsatisfactory news stands to intensify a fibre of debility recently available in mark AUDUSD.

SPOT USDCAD PRICE CHART: DAILY TIME FRAME (APRIL 24, 2019 TO JULY 31, 2019)

Spot USDCAD Price Chart

Spot USDCAD should also be kept on a radar with both Canada and a US set to recover production PMI data. Also, deliberation executive bank dynamics between a BOC remaining sidelined and a Fed now on a backburner, mark USDCAD opening competence vaunt a cleaner take during where a US Dollar will conduct from here.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time marketplace insight

US Dollar Price Action Eyes BOE, PMI Data Post-Fed Rate Cut

US DOLLAR TURNS TO MANUFACTURING PMI DATA, BOE

  • The Federal Reserve (Fed) only suggested a initial rate cut given embarking on a hiking cycle that began Dec 2015
  • US Dollar cost movement will approaching take cues for a subsequent instruction from a BOE and production PMI reports out of China, Canada and a US
  • Download a giveaway DailyFX Q3 USD Forecast for in-depth technical and elemental outlook

Now that a July Fed meeting is in a rearview mirror, traders will approaching spin to high-impact mercantile events and information releases slated for Thursday’s event with a August BOE meeting in serve to production PMI readings out of China, a US and Canada.

Seeing that mark GBPUSD will be customarily impacted by a Bank of England’s financial process refurbish and Governor Carney’s follow adult explanation – quite in propinquity to a UK economy and a latest Brexit developments – US Dollar opening over a brief tenure competence be improved celebrated around mark AUDUSD and mark USDCAD.

FOREX ECONOMIC CALENDAR HIGHLIGHTS GBPUSD, AUDUSD, USDCAD

AUDUSD GBPUSD USDCAD Forex Economic Calendar Chart

Check out a extensive forex mercantile calendar for a full list of arriving events and information releases!

Overarchingly, Chair Powell voiced a neutral position in courtesy to destiny monetary process decisions with today’s movement to reduce rates noticed as an ‘insurance move’ to strengthen opposite downside risks and keep ancillary a mercantile expansion. Despite a FOMC still saying a certain baseline outlook, downside risks sojourn primarily around negligence tellurian GDP, trade fight doubt and debility opposite a production industry.

US Economic Surprise Index and DXY US Dollar Index Price Chart

US Fed Chair Powell also settled that a latest FOMC rate cut was a “mid-cycle adjustment” and that Wednesday’s preference to reduce seductiveness rates by 25 basement points “differs from a start of a extensive slicing cycle.” In light of a latest Fed process decision, it stays peerless to watch incoming mercantile information closely for intensity discernment on how a US executive bank competence respond to mercantile developments down a road.

As such, Thursday’s recover of a Caixin China Manufacturing PMI, RBC Canada Manufacturing PMI and ISM US Manufacturing PMI reports will approaching be scrutinized for signs of a miscarry or serve decrease opposite this sector. Yet, it is value mentioning that a some-more sanguinary tinge conveyed by Powell – relations to a augmenting dovishness over a final few Fed meetings and other executive banks – poses as a bullish awaiting for a US Dollar.

SPOT AUDUSD PRICE CHART: DAILY TIME FRAME (MARCH 26, 2019 TO JULY 31, 2019)

Spot AUDUSD cost chart

Seeing that China is Australia’s largest trade partner, a Australian Dollar stands to be impacted by a recover of a Caixin Chinese production PMI report. If a information comes in hotter than expected, mark AUDUSD could scratch behind some of Wednesday’s downside. Conversely, a unsatisfactory news stands to intensify a fibre of debility recently available in mark AUDUSD.

SPOT USDCAD PRICE CHART: DAILY TIME FRAME (APRIL 24, 2019 TO JULY 31, 2019)

Spot USDCAD Price Chart

Spot USDCAD should also be kept on a radar with both Canada and a US set to recover production PMI data. Also, deliberation executive bank dynamics between a BOC remaining sidelined and a Fed now on a backburner, mark USDCAD opening competence vaunt a cleaner take during where a US Dollar will conduct from here.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time marketplace insight