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Investinglive Americas FX news wrap 30 Jul: FOMC keeps rates unchanged. No hint of a cut. | investingLive

The Fed held rates steady, but a historic split emerged. For the first time in over three decades, two voting members—Governors Michelle Bowman and Christopher Waller—dissented, favoring a 25bps rate cut. Nine members voted to keep rates unchanged, with one voter absent.

Fed Chair Powell acknowledged some softening in consumer spending and “chinks in the armor” of the labor market, particularly in private sector job creation. Still, he and the majority judged it prudent to wait, emphasizing that the economy remains in a solid position. He noted that last month’s employment gains were largely government-driven, adding extra weight to this Friday’s jobs report.

On inflation, Powell reiterated that it remains above the 2% target, even excluding tariff effects. He described the future impact of tariffs as uncertain, though allowed that a one-time price level increase is a reasonable base case. Nevertheless, he maintained a cautious stance, unwilling to signal a September cut.

Importantly, the Fed will receive two more inflation and jobs reports before the September meeting, which Powell said will inform their decision. He also confirmed the dissenters would explain their rationale in the coming days, and characterized the meeting as one of the most engaging he’s participated in.

Addressing housing, Powell said the best support the Fed can offer is to achieve 2% inflation and maximum employment, noting that the Fed does not control longer-term yields that affect mortgage rates.

Market expectations reacted accordingly: the odds of a September cut dropped from 68% to 49%, and the October probability declined from 83% to 69%. The US dollar moved higher.

The US dollar moved solidly higher with the major currency pairs all near extreme levels at the close of day. The changes versus dollars show:

  • EUR: +1.20%
  • JPY: +0.70%
  • GBP: +0.80%
  • CHF: +1.05%
  • CAD: +0.50%
  • AUD: +1.15%
  • NZD: +0.96%

Technically:

  • EURUSD: The pair fell below the 50% midpoint of the 2025 range at 1.14475, which now acts as resistance. The next key support comes in at the 100-day moving average at 1.1390. A break below that would increase bearish momentum.
  • USDJPY: Extended gains pushed the pair above its 50% midpoint of 2025 at 149.036, with price now approaching the 200-day moving average at 149.535. The current price is near 149.48, just below that key technical level. The pair hasn’t traded above the 200-day MA since mid-February, making this a pivotal area for both buyers and sellers.
  • GBPUSD: The pair broke below both its 100-day moving average at 1.33336 and the 50% midpoint of the 2025 range at 1.3247. It is currently trading just under the midpoint at 1.3239, keeping the bearish bias intact.
  • USDCHF: The pair climbed above the 38.2% retracement of the May–July decline at 0.8102 and is now testing a swing area between 0.8147 and 0.8155. A break above opens the door toward the 50% retracement at 0.8173.
  • USDCAD: The pair broke above its 100-day moving average at 1.3828 for the first time since early April. The break signals a shift toward a more bullish tone, with attention now on the May 29 high at 1.3859, followed by the 1.3928–1.3978 swing area.
  • AUDUSD: The Aussie rejected its 200-bar MA on the 4-hour chart at 0.6528, then plunged below key support from the July swing low at 0.6452. It is now testing the 100-day moving average at 0.6424, with today’s low reaching 0.6426. This MA will be a key barometer for bulls and bears into the new trading day.
  • NZDUSD: Sellers drove the pair below its 100-day MA at 0.5939, breaking a trendline and the July low at 0.5904. It is now testing a support cluster between 0.5882–0.5892, just above the 38.2% retracement at 0.5877. A break below this zone would further strengthen the bearish bias.

The Bank of Canada also met today and kept rates unchanged. Governor Tiff Macklem emphasized the high degree of uncertainty surrounding trade policy, noting that even if a deal is reached, trust will be difficult to rebuild and volatility will likely persist. This uncertainty is a key reason why the Bank is taking a cautious, meeting-by-meeting approach to monetary policy.

Macklem stated that the decision to hold the policy rate unchanged was influenced by a recent pickup in core inflation, which has “gotten our attention.” However, he expects many of the inflation drivers to unwind over time, and noted that the stronger Canadian dollar should help ease inflationary pressures. The Bank is focused on where inflation is heading, not just where it is today, but acknowledged that looking ahead is harder in such an unpredictable environment.

On the economic outlook, Macklem reiterated that Q1 growth was boosted by a surge in exports, while Q2 is expected to contract sharply due to a reversal in trade. In Q3, exports are not showing much movement, while consumption is expected to grow moderately. He stressed that tariffs will make the economy less efficient, reduce overall income, and place Canada on a permanently lower growth path. Still, the Bank is committed to ensuring tariffs do not fuel persistent inflation, and will continue using Canada’s flexible exchange rate to tailor monetary policy to domestic conditions.

US stocks close mixed:

  • Dow industrial average fell -171.71 points or -0.38% at 44461.28
  • S&P index fell -7.96 points or -0.12% at 6362.90.
  • NASDAQ index rose 31.38 points or 0.15% at 21129.67.
  • Russell 2000 fell -10.56 points or -0.47% at 2232.39..

After the close Meta and Microsoft both beat handily on both the top and bottom lines. In after-hours trading:

  • Microsoft is trading up $37.26 or 7.26% at $551.53. Above $518.29 is a new all-time high.
  • Meta is trading up $60.91 or 8.88% at $756.97. That is above its all-time high of $747.90.

Amazon and Apple reported earnings after the close tomorrow:

  • Amazon shares closed down marginally today by -0.35%, but are trading up $4.82 or 2.09% in after-hours trading. For the year Amazon shares are up 4.92% at the close today.
  • Apple shares fell -1.05% today to $209.05. In after-hours trading it is trading down another $0.85 or -0.41% at $208.20.

Chip stocks benefit from the likes of Microsoft and Meta and their plans for global domination in AI and related industries:

  • Nvidia is trading at $180.94 up $1.67 or 0.93% in after-hours trading after rising 2.14% in trading today. The price is trading above its all-time high price of $179.89 in the after hours trading.
  • Broadcom rose 1.75% in trading today. It is trading near unchanged and after hours.
  • AMD is trading up 1.34% in after-hours trading advancing 1.17% during the day.

In the US debt market, yields moved higher with the shorter end up the most as expectations of a September cut fell

  • 2-year yield 3.946%, +7.2 basis points
  • 5-year yield 3.967%, +6.1 basis points
  • 10 year yield 4.374%, +4.6 basis points
  • 30 year yield 4.902%, +3.4 basis points.

In other economic data today, GDP for the second quarter came in higher than expected 3.0%. However, the unwinding of the inventory build of imports in the first quarter which lowered GDP in Q1, was reversed in the second quarter with imports falling sharply. That at the impact of raising GDP on quarterly basis. So although stronger, some of the gains were a payback from tariff related flows.

The ADP employment data came in modestly stronger than expectations. The BLS employment data will be released on Friday. The Fed chair acknowledged some weakness in the private employment picture. Recall from last month, most of the gains were surprisingly attributed to a rise in local and state government jobs. That is not likely to be repeated. Be aware.