Dollar Dumped Hard Post FOMC

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Market Drivers October 31, 2019
Dollar in back foot
EUR CPI in line
Nikkei +0.37% Dax -0.57%
UST 10Y 1.74%
Oil $54/bbl
Gold $1505/oz
BTCUSD $9004

Europe and Asia:
EUR CPI 0.7% vs. 0.7%

North America:
CAD GDP 8:30

The dollar was broadly lower falling hardest against the yen in Asian and early European dealing today as FX markets continued to react to the FOMC rate decision yesterday.

Although Fed Chair Powell clearly signaled that the Fed will pause after yesterday 25bp cut, his refusal to even consider the prospect of tightening weighed on the buck and especially USDJPY which tumbled toward the 108.00 figure as US yields declined.

The move in the dollar was surprising since ahead of the Fed the markets were pricing in greater odds of rate cuts than post FOMC, but the sell the news dynamic was clearly in play and the action in US yields weighed heavy on the buck.

With no major data today the focus will turn to tomorrow’s NFP which could push the dollar another leg lower if the numbers miss their mark. The markets are looking for sub 100K print but a big rebound in Hourly Wages to 0.3%. If those don’t materialize US yields could compress further and drag USDJPY below the 108.00 level.

Boris Schlossberg
Managing Director

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