February 1, 2024.
NEW YORK, Jan 31 (Reuters) - The dollar pared losses against the euro** and against the yen on Wednesday after Federal Reserve Chair Jerome Powell said a rate cut in March was not a "base case" for the Fed.
Previously, the Fed took a neutral and less ** view of the outlook for interest rates, which was lower than many investors expected.
Karl Schamotta, chief market strategist at Toronto Corpay, said the Fed issued an "extremely neutral, noncommittal statement".
The Fed kept interest rates unchanged and abandoned long-held claims that further borrowing costs could be achieved. But it did not hint at an imminent rate cut.
Thierry Albert Wizman, a global FX trader, said: "Traders believe that as the policy bias shifts to neutral, the Fed will use the language to match this shift. But the Fed didn't. If anything, the Fed has added some hawkish language to the text. "Interest rate strategist at Macquarie New York.
Fed Chair Jerome Powell said at a press conference that the Fed needs to see more favorable data to ensure it's time to cut rates. "We do have confidence, but we want to have more confidence," he said, arguing that cooling inflation data is sending a "real signal".
The U.S. dollar index is **026% to 10366。This month is expected to ** 23%, which was the best month since September.
Traders are now pricing in a 38% chance of a Fed rate cut in March, down from 59% earlier on Wednesday. That's down from 89% a month ago.
Investors are also eyeing the U.S. jobs report for January, which is due on Friday, which is expected to show employers adding 180,000 jobs for the month.
The ADP National Employment Report showed Wednesday that private jobs rose by 107,000 last month, below economists' expectations of 145,000.
The US dollar has done something this year as US economic data shows that the economy remains resilient and has a better outlook than similar regions, including the Eurozone.
EURUSD**04% to 1$08005 as low as 1$07,950, the lowest level since December 13. The decline for the month was 22%, the worst month since September.
Data from early Wednesday showed that German inflation fell slightly lower than expected in January, falling to 3., driven by energy***1%。
USDJPY**025% to 14726。The yen weakened due to the large gap between US and Japanese interest rates.
USDJPY is expected to post a monthly **4 as weak wage data and cooling inflation leave room for the Bank of Japan to raise interest rates slowly5%, the biggest increase since February last year.
A summary of comments from Wednesday's meeting showed that BoJ policymakers discussed the possibility of exiting negative interest rates in the near term and phasing out the bank's massive stimulus program in January.
The summary highlights the growing view within the board that the conditions are ripe for short-term interest rates to soon move out of negative territory, which would be Japan's first rate hike since 2007.
Ahead of the Bank of England's policy announcement on Thursday, the pound ** 028% to 1$26630, the interest rate will also remain the same.
In terms of cryptocurrencies, Bitcoin** 157%, to $42,864.