FX markets

Daily Market View 30-10-2025

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1:27

Fed cuts, but Powell's speech allows Dollar to rocket regardless

1 Minute Market Rundown

Federal Reserve cuts US base rate by 0.25%, but Powell says "December cut is not guaranteed" .
This implication sees estimates of Fed's move in December go from 98% chance of a cut to just 71%.
Prime Minister Starmer refuses to rule out raises to the main UK Income Tax and Personal National Insurance tax rates.

USD-

The Dollar rallied 0.67% yesterday following the Fed's well expected 0.25% interest rate cut. This sounds like a counterintuitive, but the devil, as always, is in the detail, with Chairman of the Fed Powell coming out after the decision to strongly state that a December cut was "far from guaranteed".

Screenshot 2025-10-30 081955

Just as I had been hinting at, anything less than an emphatic statement of intention to cut would soften down expectations. And that is exactly what has happened, with expectations falling from 98% sure of a December cut to just 71%, making traders quickly readjust positions to cover the case of no-cut.

This has then triggered a rally in USD, that has been borne out yesterday and today.

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