Forex Today: Fed delivers hawkish hold, US Dollar remains under pressure
Here is what you need to know on Thursday, January 29:
The US Dollar Index (DXY) rebounded above 96.60 on Wednesday after White House Treasury Secretary Scott Bessent said the US has a strong-dollar policy, implying the right fundamentals are in place. Bessent also denied that the US was intervening in currency markets to support the Japanese Yen.
The DXY fell to four-year lows near 95.50 late on Tuesday, after United States (US) President Donald Trump said he was comfortable with a weak US Dollar when asked whether it had declined too much. Trump further stated that he will announce his pick for the new Fed Chair soon and that interest rates will be lower under new leadership at the US central bank.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.79% | 0.32% | 0.74% | -0.13% | -0.14% | 0.02% | 0.98% | |
| EUR | -0.79% | -0.47% | -0.05% | -0.91% | -0.92% | -0.76% | 0.20% | |
| GBP | -0.32% | 0.47% | 0.42% | -0.44% | -0.45% | -0.29% | 0.67% | |
| JPY | -0.74% | 0.05% | -0.42% | -0.87% | -0.88% | -0.71% | 0.23% | |
| CAD | 0.13% | 0.91% | 0.44% | 0.87% | -0.01% | 0.16% | 1.12% | |
| AUD | 0.14% | 0.92% | 0.45% | 0.88% | 0.00% | 0.15% | 1.12% | |
| NZD | -0.02% | 0.76% | 0.29% | 0.71% | -0.16% | -0.15% | 0.96% | |
| CHF | -0.98% | -0.20% | -0.67% | -0.23% | -1.12% | -1.12% | -0.96% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US Federal Reserve (Fed) announced its interest rate decision to leave the rate unchanged at 3.50%-3.75%, as expected.
Key takeaways from the Federal Open Market Committee (FOMC) statement:
Uncertainty about the economic outlook remains elevated.
The unemployment rate has shown some signs of stabilization, but job gains have remained low.
The vote in favor of the policy was 10-2, with governors Miran and Waller dissenting in favor of a 25-basis-point cut.
Finally, Fed Chair Jerome Powell held a press conference to provide more cues on future monetary policy, but offered little on that and more about politics, questions that Powell refused to answer.
Regarding the economy, Powell noted that inflation remains somewhat elevated relative to the goal and that the shutdown likely weighed on Q4 growth, which he believes will be reversed. Additionally, he stated that the labour market may be stabilising as hiring, openings, and wage growth showed little change. By the end of the day, the DXY recovered and held around 96.50.
AUD/USD is trading near the 0.7000 price region, crossing levels it hasn’t touched since February 2023. The Australian Dollar was bolstered by stronger-than-expected Australian inflation data, which boosted expectations of a Reserve Bank of Australia (RBA) interest rate hike. Australia’s Consumer Price Index (CPI) inflation rose to 3.8% YoY in December from a 3.4% increase reported in November. This figure came in hotter than the 3.6% expected. Meanwhile, the monthly CPI climbed 1% in December, compared to the previous reading of 0%, above the market consensus of 0.7%.
USD/JPY is trading near the 153.80 price region, trimming a big part of its weekly losses as the USD recovers some ground. Meanwhile, Japan’s fiscal health stays in focus as Prime Minister Sanae Takaichi pushes aggressive spending and tax-cut plans.
EUR/USD is trading near the 1.1930 price region, trimming half of its weekly gains, holding on to modest gains after the Fed’s interest rate decision.
GBP/USD is trading near 1.3770 after the Fed’s interest rate decision and Trump-related turmoil
USD/CAD is trading near the 1.3600 price region after the Bank of Canada (BoC) also announced its interest rate decision, holding rates at 2.25%, as expected.
Gold is trading near an all-time high above $5,330 amid geopolitical uncertainty and a weak USD.
What’s next in the docket:
Thursday:
- US Initial Jobless Claims.
- Tokyo January CPI.
- Japanese December employment data.
Friday:
- Flash Germany Gross Domestic Product (GDP).
- Flash Eurozone GDP.
- Flash German CPI.
- US Producer Price Index (PPI).