US Dollar Slumps as Fed Cuts Rates, Aussie and Sterling Gain Ground

The U.S. dollar dropped after the Federal Reserve cut its interest rate by 50 basis points, with sterling, the Australian dollar, and the Norwegian crown outperforming. Fed policymakers project further rate cuts by 2026, while other global currencies gain due to various economic data and central bank decisions.

The U.S. dollar took a sharp decline on Thursday after the Federal Reserve slashed its interest rate by 50 basis points and revised its monetary policy outlook. In contrast, sterling, the Australian dollar, and the Norwegian crown outperformed their counterparts.

Lefteris Farmakis, forex strategist at Barclays, noted the dovish nature of the Fed's decision, predicting near-term U.S. dollar weakness but cautioning that more significant weakness may be unlikely. Economists surveyed by Reuters had anticipated a smaller, 25-bp cut.

The dollar index fell by 0.33% to 100.68, reaching its lowest level in over a year. Meanwhile, the Bank of England's decision to keep rates on hold and positive domestic data for the Australian employment market boosted their respective currencies against the dollar.

(With inputs from agencies.)