The U.S. dollar surged against other major currencies on Wednesday, following a Federal Reserve rate cut that lacked urgency for rapid future reductions. The dollar’s strength was reinforced by a decline in new unemployment benefit applications in the U.S., reversing the previous week’s increase.
This dollar rally put pressure on the British pound, erasing gains made after the Bank of England’s rate hold and their slowed pace of government bond sales. Despite the Fed’s quarter-point rate cut, Chair Jerome Powell presented the move as risk management rather than a prelude to more aggressive easing, offsetting market expectations.
Analysts had varied reactions to Fed messaging; while some anticipated further cuts, others see the Fed’s stance as conservative. Meanwhile, global markets face shifts as the BoE continues modest bond disposal, Norway cuts rates, and Japan anticipates policy announcements. These movements reflect a still uncertain global economic landscape.
(With inputs from agencies.)
