Today the American dollar is dominating the news and all other major currencies. Yesterday the Federal Reserve finished an important policy meeting and their chief, Jerome Powell, announced a 25 basis point interest rate cut.
However, contrary to previous speculation, Powell said this is likely going to be the only “insurance” adjustment this year and that it does not signify a dovish turn in the overall monetary policy of the United States.
Therefore, investors now no longer expect more interest rate decreases in the foreseeable future. This caused a solid strengthening of the USD against other currencies, climbing to 2-year highs against the euro.
Analysts see similarities between Powell’s decision and the leadership of Alan Greenspan, who led the Federal Reserve in the late 90s. They expect that this most recent rate decrease, which was the first since the 2008 financial crisis, will support the US economy well enough. After all, fundamentals from the States have been mostly positive and with the lower interest rate it’s expected that growth will improve.
The US dollar index climbed to 98.63. The euro fell to $1.1036 and the pound to $1.2115.