Dollar Weakens, Gold Hits Record High as Markets Await Fed Rate Decision

Global markets steadied on Wednesday as investors braced for a widely expected interest rate cut from the U.S. Federal Reserve, sending the dollar lower and gold prices to fresh record highs. Asian stocks rose, with Hong Kong leading the rally, while European and U.S. stock futures also pointed higher. Traders are looking for clues on how far and fast the Fed will ease monetary policy as economic risks mount.

The dollar remained under pressure after sliding to its lowest level since early July, while the euro touched its strongest level in four years on Tuesday. The dollar index inched up to 96.72 after Tuesday’s 0.7% drop, while the greenback traded little changed at 146.43 yen. “Markets are effectively daring the Fed to over-deliver on the dovish side,” said Dilin Wu, research strategist at Pepperstone, hinting at possible volatility if Fed Chair Jerome Powell’s remarks disappoint.

Gold extended its rally, trading at $3,683 per ounce after briefly topping $3,700 in the previous session—the first time in history the metal crossed that milestone. Analysts attribute the surge to expectations of lower U.S. rates and rising geopolitical tensions. Oil prices were steady, with U.S. crude at $64.45 per barrel, as Ukrainian drone attacks on Russian energy facilities threatened supply disruptions.

Asian equity markets were mixed, with Hong Kong’s Hang Seng Index jumping 1.4% on optimism over a possible U.S. deal to allow TikTok to continue operating, while Japan’s Nikkei slipped 0.1% after a record close. MSCI’s broadest index of Asia-Pacific shares outside Japan gained for a ninth straight session. In Europe, futures for the Euro Stoxx 50, Germany’s DAX, and the UK’s FTSE all rose modestly ahead of the Fed’s announcement.

Beyond the Fed, the Bank of Canada is also expected to cut rates on Wednesday to support a weakening labor market, while soft trade data from Japan underscored the economic drag from global tariffs. Meanwhile, cryptocurrencies lost ground, with bitcoin falling 0.2% to $116,687 and ether slipping 0.18% to $4,491. Investors worldwide remain on high alert for central bank signals that could shape currency, commodity, and equity markets for months to come.

source: reuters