The post-FOMC dollar strength continued overnight, with the dollar index pushing back above 100 for the first time since August 1, while the euro-dollar slipped below 1.15. The yen was a rare exception to the broad dollar bid, as USD/JPY retreated from nine-month highs after Japan’s new finance minister, Katayama, voiced concern over rapid currency moves and signalled close monitoring.
Risk sentiment has deteriorated, with US equity futures sharply lower after Wall Street CEOs warned of a potential 10%-plus correction amid stretched valuations. Tensions between the US and China also resurfaced, as Beijing urged Washington to avoid key sensitive issues to preserve trade stability.
Elsewhere, the RBA kept rates unchanged, striking a cautious tone and noting that recent inflation pressures appear temporary. In Switzerland, despite softer CPI data, the SNB reaffirmed that negative rates are unnecessary for now, reiterated its readiness for FX intervention, and warned that US tariffs are weighing on global growth.
With the US government still shut down, no major data releases are expected today.
Exclusive FX research from LMAX Group Market Strategist, Joel Kruger
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