Dollar extends gains; SNB cuts, BoE stands pat

Dollar traders continue to digest Fed message

The US dollar gained against most of its major peers on Thursday and extended its gains today, as traders continued to digest the Fed officials’ signals that they are in no rush to cut interest rates further this year.

"We’re not going to be in any hurry to move," Fed Chair Powell said after the Committee decided to remain on hold, highlighting the uncertainty they have to deal with in navigating Trump’s tariff policies. Although policymakers revised their inflation projections higher and lowered their growth forecasts, Powell said that they are still seeing solid economic data, easing fears about a recession in the world’s largest economy.

What’s also interesting is that the new dot plot continued to point to two quarter point reductions by the end of the year. Yet, investors were not fully convinced about the prospect of interest rates finishing the year only 50bps lower. They are currently pencilling in 67bps worth of reductions by December.

With that in mind, attention today may fall on speeches by Chicago Fed President Austan Goolsbee and New York Fed President John Williams. Both are voting members and are considered neutral in their policy views. Therefore, should they share Powell’s view that the Committee should not rush into lowering interest rates, the dollar is likely to extend its latest recovery.

With President Trump noting on his Truth Social platform after the decision that the Fed would be better off cutting interest rates, a reiteration by Goolsbee and Williams that patience may be the best strategy would also underscore the Fed’s independence.

SNB and BoE warn about global trade uncertainty

Yesterday, the central bank torch was passed to the Swiss National Bank and the Bank of England. Getting the ball rolling with the SNB, Swiss policymakers cut their benchmark rate by 25bps and flagged increased uncertainty over the impact of Trump’s tariffs on the global economy.

That was the fifth consecutive rate reduction by the SNB, with the Swiss franc weakening and investors assigning a 20% chance of another reduction by September. Having said that though, another rate cut is not fully anticipated, and the Bank is expected to start raising interest rates at some point in 2026.

The BoE held interest rates steady at 4.5%. and pushed back on speculation that more reductions would be delivered soon, citing heightened economic uncertainty. There was no presumption that policy is on a preset path over the next meetings, the Committee noted.

Although the pound gained some ground at the time of the decision, it surrendered to the dollar’s strength later in the day, as investors continued pricing in almost two additional 25bps rate reductions this year.

In Japan, the Nationwide CPI slowed somewhat, but both the headline and core rates remained well above the BoJ’s 2% objective. The yen is being sold today, even as investors continue to assign a strong 50% probability for the next BoJ hike to be delivered in June.

Stocks retreat; oil rebounds back above $67

On Wall Street, all three of its major indices gained on Wednesday following the Fed decision, but pulled back on Thursday, suggesting that concerns over Trump’s trade policies have not vanished. This is also evident by the fact that the ultimate safe haven gold hit a fresh record high yesterday, although the precious metal pulled back thereafter and continued its retreat today. This may be due to some investors locking profits before the end of the week.

Oil prices rose on Thursday after the US issued new Iran-related sanctions, with the targeted entities including a Chinese private refinery called “teapot”. China’s teapots are the primary purchasers of Iranian oil. OPEC+ helped prices as well by issuing a new schedule instructing some members to proceed with further output cuts to compensate for producing above agreed levels.