Dollar edges lower after Fed goes big on rate cut, Aussie jumps

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Key Points

(Reuters) -The U.S. dollar edged lower on Thursday after a larger than usual interest rate cut from the U.S. Federal Reserve that had been priced in by markets...

The Fed on Wednesday kicked off its monetary easing cycle with a half-percentage-point rate cut that Chair Jerome Powell said was meant to show policymakers commitment to sustaining a low unemployment rate now that inflation has eased...

Expectations had drifted towards a dovish outcome in the days before the decision, with money markets pricing around a 65% chance of a 50 basis point (bp) cut on Wednesday..

The cut appears to be a pre-emptive one with both accompanying dot plot and press conference comments highlighting more caution when it comes to the pace and magnitude of easing policy going forward, said Salman Ahmed, global head of strategic asset allocation at Fidelity International..

Fed policymakers on Wednesday projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full percentage point next year and half of a percentage point in 2026, though they said the outlook that far into the future was uncertain...

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