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US dollar pulls back: Market awaits Fed’s rate decision – London Business News | Londonlovesbusiness.com

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US dollar pulls back: Market awaits Fed’s rate decision – London Business News | Londonlovesbusiness.com

The U.S. dollar pulled back after a rally in the previous session, driven by the Republican Party’s victory and optimism surrounding Trump’s policies.

Market participants are now cautiously awaiting the Fed’s upcoming interest rate decision.

The prospect of high public spending is seen as a potential catalyst for inflationary pressures, pushing Treasury yields higher and limiting the Fed’s ability to cut rates going forward.

However, uncertainty over Republican control of the House introduces some ambiguity about the extent of these potential legislative shifts.

Attention now shifts to the Fed’s anticipated 25-basis-point cut and any indications from Fed Chair Powell regarding the central bank’s upcoming policy decisions. Meanwhile, short-term yields are rising, reflecting market caution, while longer-dated yields have softened as the market adopts a “wait-and-see” approach.

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