The USD is mixed and little changed ahead of the FOMC/BOC rate decisions | investingLive

The USD is mixed – but little changed – ahead of the Federal Reserve rate decision at 2 PM ET. The Fed is expected to cut rates by 25 basis points to 4.25% – its first rate cut since December 2024 when the central bank cut by 25 basis points, ending the succession of cuts that took the target rate from 5.5% to 4.5%.The cut expected today is in reponse to the weaker US employment data that has shown a sharpl decline in employment than previously reported.

Focus will first be on the statement, and vote count. Will there be dissenters? Will they be for no change and/or for a 50 basis point cut. The expectations for GDP, inflaiton and unemployment will also be released, along with the “dot plot” that traders will focus on the expectations for additional cuts in 2025 (is it 1 or 2 more cuts), along with the expectations for 2026. Of course the press conference will also be a focus.

Ahead of the US rate decision at 9:45 AM ET, the Bank of Canada will announce it’s rate decision. The cental bank is expected to cut its overnight policy rate by 25 basis points, lowering it from 2.75% to 2.50%. Markets have priced in a very high probability of a move, driven by recent signs of economic weakness, including a 1.6% contraction in second-quarter GDP and rising unemployment. Inflation has also eased, with August’s annual reading at about 1.9%, below expectations, though core measures remain somewhat elevated. Taken together, the softer growth backdrop and moderating price pressures give the Bank room to ease policy. Looking ahead, analysts expect the BoC to remain cautious but signal the possibility of further cuts later this year if inflation stays under control and the economy continues to weaken.

In the video below, I will look at the 3 major currency pairs but also the USDCAD. The EURUSD is the biggest mover with a fall of -0.24% (higher USD) after the sharp rise yesterday that saw the pair extend to new highs for the year and the highest level since September 2021.The price has weakened toward the July1 high at 1.1828 but has remained above with a low of 1.1833 so far.

The USDJPY is lower (lower USD) by a modest -0.12% but is down testing the key 100 day mat at 146.19. The low has reached 146.20 so far and trades at 146.26 to start the US session. The GBPUSD is marginally changed at -0.02% to start the US session after running to higher to the highest level since July and testing a swing area between 1.3673 to 1.36826.

For the USDCAD, it too is little changed with a gain of 0.08% to start the day.

A look around the markets shows, the US stock market mixed in pre-market trading:

Dow industrial average is up 32
S&P index is down -2.26
NASDAQ index is lower by -16.25 points

in the US debt market, yields are little changed:

2- year yield 3.511%, +0.1 basis points
5 year yield 3.588%, +0.5 basis points
10 year yield 4.020%, -0.6 basis points
30 year yield 4.628%, -1.8 basis points.

Looking at other markets:

Crude oil is trading down $0.30 at $64.23
Gold is trading down $20.67 after reaching yet another record yesterday. It currently trades at $3669.23. It’s a new record high is at $3703.13
Silver is down by $0.88 at $41.64.
Bitcoin is down by -$560 at $116,258

European stock indices are trading mixed after yesterday’s sharp declines: