North American Summary and Highlights 28 Jan
Overview - The USD got a lift from comments from Treasury Secretary Bessent, but the FOMC meeting had little lasting impact, while Bessent’s comments largely overshadowed the Bank of Canada decision.
North American session
Ahead of the FOMC, after a subdued European morning, the Bank of Canada left rates unchanged as expected. The statement noted heightened uncertainty, which could be read as dovish, but USD/CAD initially extended losses below 1.3550.
Attention however quickly shifted to remarks by Treasury Secretary Bessent, who stated the US was absolutely not intervening in USD/JPY and setting the right fundamentals would be USD supportive. USD/JPY bounced to 153.70 from 152.90 and EUR/USD slipped to 1.1925 from 1.1970. USD/CAD corrected higher to 1.3580. GBP/USD and AUD/USD saw only a limited response while EUR/CHF could not sustain a brief move above .92.
The FOMC left rates unchanged as expected though with dovish dissents from Miran and Waller. The statement was lightly more positive on the economy and that view was supported by Powell, lifting the USD, but he balanced that by stating easing could be seen as the boost to prices from tariffs peaks. The USD ended slightly below pre-FOMC levels, with USD/JPY near 153.40 and EUR/USD near 1.1950. AUD/USD reached fresh highs at .7030 while USD/CAD returned to 1.3550.