Market Analysis

Greenback turns lower as October rate cut remains on the cards

The U.S Dollar traded lower against a basket of currencies on Thursday, after the FOMC meeting minutes showed that U.S policymakers judged that downside risks to the United States economy had increased since the last policy meeting.

The minutes from the September policy meeting also showed that a split was emerging inside the Federal Open Market Committee towards the future path of interest rates. Policymakers also called for more forward guidance towards interest rates, as the Federal Reserve may be coming towards the end of its ‘mid-cycle policy adjustment’.

Leading economists now expect the FOMC to reduce interest rates by a further twenty-five basis at the upcoming October 30th policy meeting. It is also widely believed that the bar for future U.S rate reductions will be raised after the October meeting, as the United States central bank risk cutting rates to fast.

The FOMC meeting minutes attributed slowing global growth and the ongoing Sino-U.S trade war as the main risk to the United States economy. FOMC Chairman Jerome Powell noted earlier this week that the U.S economic outlook remains ‘favorable’ and that the central bank will begin increasing the size of its balance sheet. Chair Powell was careful to point out that increasing the Federal Reserve’s balance sheet did not mean that the central bank was undertaking QE.

Ongoing Sino-U.S trade talks could prove pivotal to future U.S monetary policy, as the ongoing trade war is proving to be a huge drag on the global economy. The latest reports suggest a minor trade deal could be on the table. The U.S manufacturing sector is also starting to come under pressure, making negotiations over the coming days increasingly important to the United States growth prospects.


USD/CHF Daily Candlestick Chart | Source: ActivTrader

USD/CHF Daily Candlestick Chart | Source: ActivTrader


The U.S Dollar has been losing ground against the Swiss franc currency as traders seek out safe-haven asset classes in case the latest round of trade talks fail. The USD/CHF pair has strong technical resistance around the 1.0020 and 1.0080 levels, while key upcoming technical support is found at the 0.9890 and 0.9780 levels.


Written by Nathan Batchelor, External Analyst, ActivTrades

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