Dollar Gains Ahead of Fed Rate Decision

The U.S. dollar strengthened against major currencies ahead of the Federal Reserve's anticipated interest rate cut, with expectations set for a 25 basis-point reduction. Investors are adjusting portfolios as the Fed is expected to signal a cautious approach to monetary policy in 2025, possibly revising long-run rate projections higher. Significant gains in Nissan shares were attributed to speculation around a potential tie-up with Honda, which is driving up car stocks amid a backdrop of broader market volatility. The Australian and New Zealand dollars hit multi-year lows against the dollar, reflecting concerns over economic growth forecasts. Meanwhile, sterling remained resilient due to strong UK wage growth, contrasting with challenges facing the eurozone economy. The market is looking for guidance on future cuts, with analysts predicting a 'hawkish cut' from the Fed that will emphasize a slower pace of rate reductions.