Forex Today: Fed Pauses Rate Cuts - 30 January 2025

Its a busy time in the Forex market with 3 central bank meetings in the space of just 24 hours, with the Fed holding while Canada cuts and the Eurozone is likely to follow suit.

1. There were two central bank policy meetings yesterday which produced contrasting results:
   1. The US Federal Reserve passed on a rate cut as was widely expected. Fed Chair Jerome Powell made it clear that the Fed is in a "wait and see" position as President Trump begins to implement his economic policies which might produce some radical changes in the market which might also impact upon inflationary pressures. Powell emphasized that the Fed is in "no hurry" to implement further cuts and vowed that would not happen until there was "real progress on inflation or a weak job market". This had a slightly hawkish impact, effectively ruling out a rate cut in March, sending US stock indices lower but having little impact on the US Dollar.
   2. The Bank of Canada cut its Overnight Rate as expected from 3.25% to 3.00%, and also announced the end of quantitative tightening, which was strongly suggestive that the Bank is also moving into a kind of wait and see mode, as the question of whether the USA imposes tariffs on Canada starts to be answered. If tariffs are imposed, the Bank will likely have more cutting to do; if not, then it will probably be done for this cycle.
2. Markets are now shifting their attention to the European Central Bank's policy meeting today, which is widely expected to produce a cut of 0.25% in the Main Refinancing Rate to 2.90%.
3. Markets are awaiting some key US economic data, with Advance GDP numbers due today. The past quarter is expected to show an annualized growth of the US economy of 2.7%, if the real value is substantially different, it could impact expectations of the Fed's course of action a little bit.
4. Corn futures continued their long-term bullish trend yesterday, rising strongly to a new 1-year high price. Trend traders will be interested to be long of Corn. Although Corn futures can be expensive, retail traders and investors can gain exposure to Corn by the CORN ETF.
5. In the Forex market, since todays Tokyo open, the Japanese Yen has been the strongest major currency, while the New Zealand Dollar has been the weakest.
6. It is a public holiday in China today.

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