Forex Trading, News, Systems and More

investingLive Americas FX news wrap 29 Oct Fed cuts but Powell says Dec is up in the air | investingLive

The Federal Reserve cut its benchmark interest rate by 25 basis points to a target range of 3.75%–4.00%, marking the latest step in its gradual easing cycle. The decision, while widely expected, came with a rare split: Fed Governor Miran dissented in favor of a deeper 50-basis-point cut, while Kansas City Fed President Schmid preferred no change at all. The dual dissent underscored the growing divide inside the FOMC over how fast to lower rates as the economy moderates but inflation remains above target.

At the press conference, Chair Jerome Powell emphasized that the move was primarily a risk-management decision, designed to sustain growth amid emerging headwinds, but not a signal of an unbroken cutting path. He said a December rate cut is “not assured” and that the Committee would be guided by incoming data. Powell described the balance of risks as having “shifted,” with inflation risks still to the upside and employment risks now to the downside. While he reiterated the Fed’s commitment to returning inflation to 2%, he noted that disinflation in services is continuing and most long-term inflation expectations remain consistent with the Fed’s goal.

Powell also addressed structural themes. He said tariffs have added modest upward pressure on some goods prices but expected the impact to be short-lived. On the labor front, he noted that job availability and hiring difficulty are easing, suggesting a gradual cooling rather than a sharp downturn. The Fed remains attentive to potential job losses tied to AI-driven corporate restructuring but views overall labor conditions as stable. Powell added that consumer spending and AI-related investments remain key supports for the economy, even as growth slows to around 1.6% this year.

The Bank of Canada cut its policy rate by 25 basis points to 3.75%–4.00%, signaling a cautious shift toward providing modest stimulus after a period of tight monetary policy. Governor Tiff Macklem emphasized that the central bank now views its policy stance as being at the lower end of the neutral range, suggesting the rate level is no longer restrictive and is beginning to support economic growth. However, he also made clear that the decision reflects not just cyclical weakness but also structural challenges, noting that the U.S. shift toward protectionism is raising costs for Canadian businesses and making it harder to compete.

Macklem said the Bank faces a wider-than-usual range of economic outcomes, with uncertainty tied to U.S. tariffs and their inflationary effects. Importantly, he added that if the outlook changes materially, the Bank is prepared to respond — a subtle but significant qualification that suggests officials aren’t planning immediate follow-up cuts. This phrasing marked a deliberate correction during the press conference, implying that only a meaningful deterioration in the outlook would prompt further easing.

Overall, the tone of Macklem’s remarks signals that the BoC is likely moving to the sidelines, adopting a wait-and-see approach while monitoring how tariffs, structural adjustments, and softening global demand affect Canada’s growth trajectory. Markets, which had priced roughly even odds of another rate cut by mid-2026, may reassess expectations in favor of a longer hold period before any further policy moves.

On the economic front, U.S. pending home sales were flat in September (0.0%), missing expectations for a 1.0% gain, though the August figure was revised higher to +4.2%. The National Association of Realtors (NAR) noted that the steady reading came despite easing mortgage rates, with buyer confidence weighed down by labor market concerns and inventory levels reaching a five-year high.

Regionally, results were mixed. The Northeast saw a 3.1% monthly rise, while the Midwest declined 3.4%. The South posted a modest 1.1% gain, and the West slipped 0.2%. Overall, the data suggest that while lower borrowing costs are providing some support, broader economic uncertainty and ample housing supply are tempering momentum in the housing market.

US stocks were mixed with the Dow down -0.16% the S&P was unchanged and the NASDAQ index is up 0.55%. After the close matter, alphabet, and Microsoft reporting their earnings. Alphabet shares are up 5.47%. Meta shares are down sharply by -9% and Microsoft shares are down -2.3%.

Yield moved higher reacting to split Fed and the Fed chair stating the uncertainty about the December meeting.:

  • 2 year yield 3.598%, +10.4 basis points
  • 5 year yield 3.707%, +9.5 basis points
  • 10 year yield 4.075%, +9.3 basis points
  • 30 year yield 4.624%, +7.8 basis points

Crude oil inventories showed a sharp drawdown of -6.858 million barrels. The price of crude oil moved higher by $0.23 or 0.3% at $60.38.

Gold tried to rally but ran into moving average resistance on the hourly chart at the 100 hour moving average, and reversed to the downside. The price is trading lower by $-7.74 at $3944. The high price extended to $4030 before rotating back to the downside.