(AXIOS) The dollar rose to its highest level in more than 2 years after the Fed's rate cut Wednesday, as currency markets got a reality check about the growth prospects of the greenback against the world's other currencies.
John Doyle, vice president of dealing and trading at Tempus Inc., tells Axios that Wednesday’s news conference marks a “recalibration” for investors in the currency markets.
If Powell and the Fed stand by the “mid-cycle adjustment” language used during Powell’s press conference, the dollar could test its highs from March 2017.
“Today’s hawkish rate cut poured cold water on expectations for a series of rate cuts for the balance of the year.”
What happens next for the dollar will depend on what the other central banks bring to the table, Manimbo added. “If we see forceful action from the ECB in September, if the Bank of Canada joins the action, that could send the dollar flying significantly higher.”