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The EUR/USD ranged in the low 1.07’s overnight. A sense of relief percolated through world markets on Thursday after the Federal Reserve shot down talk of pivoting back to interest rate hikes, while the yen backtracked after another suspected bout of FX intervention.
Europe’s big bourses made a sluggish start as much of the region returned from a day off, but after a choppy few weeks dealers were just happy the Fed hadn’t inflicted any major damage, and that borrowing costs were ticking down again.
The Fed’s rate setters unanimously decided to leave U.S. rates in the 5.25% to 5.5% range they have been in since July but it was the post meeting press conference that proved most interesting.
While Fed chair Jerome Powell indicated that stubbornly high inflation would see a long-expected U.S. rate cut pushed back, he refused to entertain talk that rates might actually need to go up again.
The spotlight was still on the Japanese yen’s precarious level in the currency markets too.
Shortly after Powell had finished telling reporters the Fed may have to leave rates elevated, the Japanese currency surged against the dollar in its second suspected intervention-fueled leap of the week.
It traded as strong as 153 to the dollar before sliding back to around 156 in Asia and then moved to around 155.5 in Europe.
The main dollar index, opens new tab, which measures the currency against the yen, euro, sterling and three other major peers, was down 0.1% in Europe, following a 0.6% retreat on Wednesday from near six-month highs.
Europe’s dealers had nudged the euro up 0.1% in the other direction to $1.0727 despite data showing a deepening downturn in euro zone manufacturing activity.
There was some brighter news in the German data and from Paris where the OECD upgraded its global growth forecast to 3.1% for this year and 3.2% next year, although that was largely thanks to stronger-looking U.S. and Chinese economies.
Source: Reuters
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