Powell's 25 bps guidance gives USD bears sore head
Oct 1 (Reuters) - Dollar bears hoping for another jumbo interest rate cut from the Federal Reserve are growling following relatively hawkish monetary policy guidance from Fed Chair Jerome Powell on Monday.
Powell indicated that the Fed, which kicked off its easing cycle with a hefty 50 bps rate reduction on Sept. 18, would deliver 25 basis point rate cuts next month and in December "if the economy evolves as expected".
The USD index, which plumbed a 14-month low of 100.15 late last week, rose to a one-week high of 101.03 on Tuesday as the greenback benefited from Powell pushing back against bets on more supersized rate cuts.
Markets currently see a 40% chance of the Fed cutting rates by another half-point on Nov. 7 - two days after the U.S. presidential election - with a quarter-point cut fully priced. FEDWATCH
CFTC data on FX positioning showed the net USD short grew after the Fed reduced rates by 50 bps last month.
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Robert Howard is a Reuters market analyst. The views expressed are his own; Editing by Kevin Liffey
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