US recap: Dollar rises after Powell downplays rate cut 

The dollar index reversed a loss after Fed Chair Jerome Powell downplayed the central bank’s
25 basis point cut to 4-4.25% and dovish guidance for the rest of the year amid a weaker
labor market.

Powell called it a risk management cut and said that he was not prepared to adopt a neutral stance at this point, noting, in part, the tariffs’ impact on goods inflation and the impact of immigration on the jobs market. He also avoided several questions addressing the possible political influence of Fed policy.

Fed projections show two more quarter-percentage-point reductions are anticipated this year. The median one-year projection fell to 3.4% from 3.6% with long-term projections steady at 3.0%.

Only new Governor Stephen Miran, who joined the Fed on Tuesday and is on leave as the head of the White House’s Council of Economic Advisers, dissented in favor of a half-percentage-point cut.

Treasury yields rose following Powell’s comments, reversing a loss after the initial Fed statement and rate cut. Data on Thursday includes closely-watched weekly jobless claims and the Philadelphia Fed business survey for September.

Scandinavian currencies and the Swiss franc slid against the broadly stronger greenback.

Separately, the Bank of Canada reduced its key policy rate to a three-year low of 2.5% and said it would be ready to cut again if risks to the economy increased in the coming months.

EUR/USD turned down after striking a fresh four-year high of 1.1919 after the Fed cut. The pair needs to slide below the July 1 high of 1.1830 and the nearby upper Bollinger to stall upward momentum.

GBP/USD was little changed with the Bank of England expected to hold rates steady at its policy meeting on Thursday.

USD/JPY reversed a drop beneath its 100-day moving average and 146 to test its cloud bottom at 146.66.

Treasury yields were up 2 to 3 basis points. The 2s-10s curve was up about 1 basis point to +52.2bp.

The S&P 500 was little changed on the session. Oil fell 0.93%, gold dropped 0.76%, while copper slid 1.56%.

Heading toward the close: EUR/USD -0.31%, USD/JPY +0.15%, GBP/USD -0.02%, AUD/USD -0.37%, DXY +0.31%, EUR/JPY -0.16%, GBP/JPY +0.13%, AUD/JPY -0.19%.

(Editing by Burton Frierson; Reporting by Robert Fullem)