What is moving in the markets today? A technical look at the 3 major currency pairs

The Fed cut rates, BUT brought back 2 of 4 cuts expected in September (only 2 cuts expected in 2025). As a result, the market is only pricing in an 8% chance of a cut in January and only 35 basis points of cuts by the end of 2025 (even more hawkish than the Fed).

• The dollar moved higher closing the day near the highs for the major currency pairs.

US stocks moved sharply lower yesterday:

• The Dow industrial average is now down for 10 consecutive days. The decline for today is its worst single day since August 5 when the index fell -2.6%. The index fell -2.58%
• The S&P index also fell in its worst day since August 5 when the index fell -3.0%. The index fell -2.95%.
• The NASDAQ index had its worst day since July 24 when the index fell -3.64%. The index fell -3.56%

Add in the drop in the Russell 2000 which fell -4.39% and it was a bad day

US yields moved higher with double-digit gains in year 2 (Up 11.2 bps to 4.359%), and year 10 (Up 12.5 bps to 4.52%).

In today's trade, the USD is mixed (and volatile), US futures mean a higher open (S&P up 39 points, the Dow up 257, and the Nasdaq up 150 points), the yield of US mixed with the 2 year down a couple basis points and the 10 year up about 4 basis points.

The Bank of Japan kept rates unchanged. BOJ Ueda said:

• Japan's economy is recovering to a small extent, although some weakness is visible
• Hard to say whether the incoming data will be enough to support a January hike
• Need more salary data (which may mean waiting for a raise).
• Need to gauge position for a long time regarding both wages and possible Trump tariffs
• If we decide not to walk, we consider that decision a safe one.
• Of course you risk falling behind the curve in waiting
• But we will consider that risk if we decide to skip a rate hike in January

There seems to be no upside and the USDJPY is moving higher (JPY lower) as a result.

BOE also kept rates unchanged. The surprise was the vote in which there were 3 dissenters who wanted to cut rates. That has sent the GBPUSD back lower (the USD higher) after the pair moved higher in the early European session. Below are the key points from this morning's BOE statement.

• Bank rate vote 6-3 vs expected 8-1 (Dhingra, Ramsden, Taylor vote to cut bank rate by 25 bps)
• A gradual approach to the removal of monetary policy restraint remains appropriate
• We cannot guarantee when or by how much we will cut rates in 2025 as economic uncertainty is high
• Consumer price inflation of services has increased
• Domestic inflationary pressures have resolved more slowly
• Most of the UK's near-term activity indicators have declined
• The labor market is generally in balance

Taking a picture of the major currency pairs against the USD, the USD is higher against the JPY by 1.34%, but lower against other currencies with a decline of -0.53% vs the AUD –0.59% vs the CHF, -0.58% vs. the CAD and -0.59% against the NZD.