investingLive Americas FX news wrap: Fed and Bank of Canada both cut a quarter-point

• FOMC interest rate decision: Federal Reserve cuts by 25 bps, as expected
• Sept Federal Reserve forecasts: Growth estimates bumped up and 2 more 2025 cuts coming
• The full statement from the September FOMC rate decision
• Powell: Recent indications show that GDP growth has moderated
• Powell Q&A: “I don’t think we can say” that policy no longer warrants a restrictive policy
• Powell: It’s really the risks to the labor market that were the focus of today’s decision
• Bank of Canada cuts rates by a quarter-point, as expected
• Bank of Canada Update: September vs July Statements Compared
• Bank of Canada Governor Macklem: There was a clear consensus to cut by 25 basis points
• US August housing starts 1.307M vs 1.365M expected
• ECBs Nagel: A meeting by meeting basis has proven successful
• Gundlach: Gold will ‘almost certainly’ close above $4000 before year end
• Treasury Secretary Scott Bessent once listed two homes as his ‘principal residence’
• Atlanta Fed GDPNow growth estimate remains unchanged at 3.4%

Markets:

• S&P 500 down 0.1%
• WTI crude oil down 50-cents to $64.04
• US 10-year yields up 5.4 bps to 4.08%
• Gold down $32 to $3657
• USD leads, EUR lags

Ahead of the FOMC decision there were modest signs of profit taking as stock markets edged lower, the US dollar rose and gold dipped. As usual, it was mostly sideways trading until the decision.

The initial reaction to the Fed announcement was dovish as the median showed two more cuts this year but a second look began to reverse that. The shift was a narrow 10-9 one and tilted by Miran’s inclusion at the Fed. The bigger reversal came during Powell’s press conference. The market wanted to hear a strong shift towards the employment mandate but he downplayed the NFP benchmark revisions and highlighted immigration as the main driver of the changing jobs market.

A particularly notable headline was him calling it a ‘risk management’ cut and saying they will be data dependent going forward. He balanced that by saying inflation risks had diminished since April but there were a few minutes of very aggressive US equity selling.

After the press conference the temperature came down and the dip buyers waded in. That led to a roughly flat finish in US equities.

The FX moves were more-notable as USD/JPY was at 146.25 ahead of the FOMC, fell to 145.50 and is now trading at a session high of 147.02.

It usually takes some time for Fed moves to shake out. Current pricing is for 43.7 bps in easing before year end with that December meeting being a real wild-card. Historically though, when the Fed starts cutting, it tends to continue cutting.

This article was written by Adam Button at investinglive.com.