Currencies attempt rebound against Fed-driven dollar, yen slides on BOJ
Dollar gives up some gains after surging on Fed
Yen tumbles after BOJ's Ueda stresses patience
Raft of currencies bounce after tumbling on Wednesday
Updates in early afternoon trading in Europe, after BoE decision
By Harry Robertson, Rae Wee and Vidya Ranganathan
LONDON/SINGAPORE, Dec 19 (Reuters) -The dollar slipped on Thursday, a day after surging to atwo-year peak after the Federal Reserve rocked markets bysignalling a muchslower pace of rate cuts in 2025, while the yen slid after the Bank of Japan (BOJ) stood pat on rates.
Currencies around the world tumbled on Wednesday after the Fed decision boosted the dollar, although many rebounded on Thursday in choppy trading conditions with thin volumes ahead of the holiday period.
The BOJ kept interest rates steady as expected, but the yen fell sharply as Governor Kazuo Ueda gave little away in a post-meeting press conference.
The dollar JPY=EBS rose 1.4% against the yen to 157.16, its highest since July.
Investorshad been looking out for hints of imminent BOJ tightening, particularly after the Federal Reserve struck a hawkish tone at its meetinga day earlier.
But thegovernor reiterated that policymakers would need more time to assess incoming economic data and the implications of U.S. President-elect Donald Trump's policies.
"I think the market was anticipating that the furthest they would go today would be a hawkish hold," Jane Foley, head of FX strategy at Rabobank, said.
"But some of the comments Ueda has made could perhaps be interpreted as not being very hawkish. For example that he's waiting to see data on the momentum of wages in the spring wage talks."
In the broader market, the fallout from the Fedcontinued to ripple across markets aftertraders heavily dialled back on easing expectations next year.
The dollar index =USD was last down 0.25% after jumping more than 1% on Wednesday to a peak of 108.25.
The euro EUR=EBS, which tumbled 1.34% on Wednesday, managed to claw back some losses and was last 0.5% higher at $1.0403.
Foley at Rabobank said the euro was naturally rebounding and volatility was higher due to low holiday trading volumes.
The Bank of England held interest rates at 4.75% as expected on Thursday but the pound fell after three policymakers voted for a cut, surprising investors who had expected only one official to opt for a reduction.
Sterling dipped after the announcement and was last up 0.2% at $1.2598GBP=D3, having climbed as much as 0.7% earlier in the day after shedding 1.1% in the previous session.
The dollar's rally sent its peers including the Canadian dollar CAD=D3 and the South Korean won KRW=KFTC tumbling, although many currencies found a footing against the greenback on Thursday.
"We think (the) decision marks the start of an extended pause from the FOMC, even if it is a little too early to say this explicitly," Nick Rees, senior FX market analyst at Monex Europe, said.
"Anupward adjustment in market expectations should support dollar upside over the coming months."
The Canadian dollar CAD=D3 sank to its lowest in more than four years at 1.4466 per U.S. dollar. The won KRW=KFTC tumbled to its weakest level in 15 years.
Fed Chair Jerome Powell said more reductions in borrowing costs now hinge on further progress in lowering stubbornly high inflation, sending global stocks plunging and bondyields spiking.
Policymakers estimated they would be likely to lower borrowing costs by just 50 basis points next year, 50 basis points less than they envisaged in September.
China's onshore yuan CNY=CFXS finished the domestic session at 7.2992 per dollar, the weakest close since November 2023.
Australia's dollarAUD=D3 bottomed at $0.6199, a two-year low, but was last up around 0.5%.
The kiwi NZD=D3 dropped to a two-year low before also ticking up. Data on Thursday showed that New Zealand's economy sank into recession in the third quarter.
The Swedish and Norwegian crowns both rebounded against the dollar on Thursday, afterSweden cut rates butNorway held them steady.
World FX rates https://tmsnrt.rs/2RBWI5E
Dollar charges ahead https://reut.rs/41GodSA
Reporting by Harry Robertson in London and Rae Wee and Vidya Ranganathan in Singapore; Editing by Sam Holmes, Lincoln Feast, Shri Navaratnam, Peter Graff and Andrew Heavens
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
