CAD

A wave of optimism is washing across financial markets this morning after the Federal Reserve cut rates by more than expected, demonstrating a strong commitment to supporting labour markets and sustaining the US economic expansion. Yesterday’s decision to lower benchmark borrowing rates in an unusually-large half-point increment initially triggered a rally in risk assets and a corresponding decline in the dollar, but Chair Jerome Powell generated some turbulence during the press conference as he tried to discourage bets on deep cuts at future meetings. “There’s no sense that the committee feels it’s in a rush to do this,” he said....

Happy Fed Day to all who observe. With hours to go before the world’s most powerful central bank delivers its first post-pandemic rate cut, investors still have no clarity on how big it will be. The dollar is flat, Treasury yields are little changed, and North American equity indices are setting up for modestly-stronger open, as market participants cut risk into what could be characterised as the most deeply-untradeable announcement in recent memory. Data released yesterday morning refused to conform with the imminent-slowdown thesis. So-called control group retail sales – which exclude food, cars, gasoline, and building materials – climbed...

Markets are caught in an uneasy equilibrium as the Federal Reserve begins its two-day meeting. The dollar is changing hands at its weakest levels since January, the Japanese yen is retreating from yesterday’s high, both the euro and pound are consolidating their gains, and emerging market currencies are broadly on the defensive as traders cut risk into tomorrow’s decision. The scale of tomorrow’s rate cut remains deeply uncertain, but futures-implied odds on a 50 basis-point adjustment have climbed above 70 percent. This has very little to do with incoming economic data – no first-tier releases have been published – and...