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The US Federal Reserve cuts rates as expected by 0.25%, sending US equity indices to new record highs despite the Fed’s forecast for 2026 cuts declining..

1. The US Federal Reserve held its policy meeting, and as was nearly unanimously expected, cut its interest rate by 0.25%. However, there were two hawkish tilts: Chair Jerome Powell talked about inflation remained “elevated” and more or less ridiculed talk of a 0.50% cut. The FOMC’s projection for 2026 showed only one cut is expected during that calendar year, less than expected. This sent US treasury yields and the US Dollar higher and briefly sent US stock markets lower before a recovery later. In off-hours trading, markets are pricing both the S&P 500 Index and the NASDAQ 100 Index at new all-time high prices, meaning trend and momentum traders will want to be long here. However, the increases have been slight, possibly reflecting the bearish tilt. Markets are currently pricing in an 83% chance of two more 0.25% rate cuts before the end of 2025.
2. The Bank of Canada also cut its interest rate by 0.25% yesterday, as was widely expected. The Canadian Dollar weakened accordingly a little yesterday, but not by an amount to get excited about.
3. Gold and Silver are still looking bullish, but have retraced from their recent long-term highs made earlier this week. Trend and momentum traders will remain interested in being long of both.
4. In the Forex market, the New Zealand Dollar has been the weakest major currency since today’s Tokyo open, with the British Pound again the strongest. However, attention will likely be focused today on the EUR/USD currency pair, which made a substantial bullish breakout two days ago by closing at a new 4-year high price, but is now trading considerably lower.
5. UK CPI (inflation) data released yesterday showed an annualised rate of 3.8%, exactly as expected.
6. New Zealand GDP data released earlier showed an unexpectedly strong drop next quarter, by 0.9% instead of the 0.3% which was widely expected.
7. Australian Unemployment Rate data released earlier showed a rate of 4.2%, exactly as expected.
8. The Bank of England will be holding a policy meeting today but is not expected to make any changes to its Bank Rate of 4.00%. The voting data will be closely monitored.
9. There will be a release of US Unemployment Claims data today.
10. The Bank of Japan will hold a policy meeting tomorrow, but is not expected to make any change to its Policy Rate.