Forex Today: Central banks’ frenzy leaves a sour taste in traders’ mouths

What you need to take care of on Friday, September 23:

Several central banks announced monetary policy decisions following the US Federal Reserve meeting.

The first one was the Bank of Japan which decided to keep its monetary policy on hold. However, not long after the meeting, the BOJ intervene in the FX market. The USD/JPY pair plunged like a rock, from an intraday high post-meeting of 145.89 to 140.34. It currently trades at around 142.40.

The Switzerland National bank hiked its benchmark rate by 75 bps. However, USD/CHF advanced, ending the day in the 0.9780 price zone. Governor Thomas Jordan said they are ready to intervene to steer monetary conditions for the Swiss Franc.

It was then the turn of the Bank of England, which pulled the trigger by 50 bps, somehow disappointing investors. Governor Andrew Bailey noted they would continue responding “forcefully, as necessary” to inflation, despite the risk of a steeper economic setback.

As a note of color, it is worth adding that the  Türkiye Central Bank, in fact, cut rates from 13% to 12%. On the other hand, President Erdogan arranged a meeting with Russia to discuss an agreement on payment and possible sanctions. Moscow, in the meantime, threatened the western world with a nuclear war amid the latter help to Ukraine.

Recession seems inevitable as stubbornly high inflation plus the escalation of the war forced policymakers’ hands. Stocks fell, while US government bond yields soared to fresh multi-year highs.

The EUR/USD pair trades around 0.9830, meeting intraday sellers at around 0.9900. The AUD/USD pair posted a modest intraday advance and hovers around 0.6640/50, while USD/CAD trades at 1.3480.

Spot gold posted a modest intraday advance and settled at $1,672 a troy ounce. Crude oil prices finished the day pretty much unchanged, with WTI now changing hands at $83.50 a barrel.

On Friday, S&P Global will release the flash estimates of the September PMIs for major economies.

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