The Federal Reserve's recent 50 basis point rate cut has triggered significant volatility in the foreign exchange market over the past 15 hours. As North American traders return, the U.S. dollar is under pressure. Despite U.S. equities closing lower yesterday, the Fed's move has pushed global stocks higher, and U.S. index futures are experiencing sharp gains. Gold remains near record highs, having flirted with $2,600 yesterday. Meanwhile, November WTI crude oil continues its recovery, bouncing back from levels below $65 last week.

Asia-Pacific Markets
Australia’s August employment data was strong enough to suggest the Reserve Bank of Australia will maintain its hawkish stance at next week’s meeting on September 24.
The U.S. dollar fell sharply following the Fed’s rate cut, hitting new session lows during Fed Chair Powell's press conference. It initially dropped from around JPY142 before the announcement to below JPY140.50, hovering just above Tuesday’s low. However, market sentiment reversed, with rates rising, stocks falling, and the dollar recovering. In a dramatic turnaround during early Asia-Pacific trading, the greenback surged to a nine-day high near JPY143.95 before meeting resistance and sliding back to JPY142. By late European morning, the dollar was trading near the middle of the day's range.

European Markets
The Bank of England is set to make its policy announcement shortly. While no rate hike is expected, markets are pricing in at least 50 basis points of cuts before year-end, with further reductions of 75-100 basis points in the first half of next year.
Following the FOMC decision, the euro briefly spiked to a monthly high of almost $1.1190, only to see its gains wiped out in the ensuing market chaos. The single currency briefly dipped below $1.11 but later rebounded, reaching $1.1175 by the European morning after a low of $1.1070 during the Asia-Pacific session.

American Markets
The Federal Reserve’s 50 basis point rate cut marks the beginning of an easing cycle that officials expect will last through 2026. The Fed’s median projection sets the terminal rate between 2.75% and 3.0%.
In the meantime, the U.S. dollar is facing significant pressure today, posting a big outside down day after nearly reaching CAD1.3650 before reversing course. Canada is set to release July retail sales data tomorrow, which will be closely watched by the market.