Twin Cuts, Diverging Signals — What Traders Must Know Now

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Twin Cuts, Fed’s Balancing Act & CAD’s Crossroads

Markets were dominated by central bank fireworks mid‑week. The Bank of Canada delivered a widely expected 25bp cut, citing a weakening labor market, falling exports, and moderating inflation. Governor Macklem hinted this likely isn’t the last move, with December eyed for another reduction.

The Fed followed with its first cut of 2025, lowering rates by 25bp to 4.00–4.25%. Powell framed it as a “risk management cut,” acknowledging labor market deterioration while still grappling with sticky inflation. The dot plot revealed a divided committee: a slim majority sees two more cuts this year, while others prefer to pause. The dollar whipsawed — initially weaker, then rebounding as Powell downplayed labor risks.

For traders, the message is clear: central banks are diverging in tone and pace, and volatility is the name of the game.

⚡Daily Broad Market Recap – September 17, 2025

• Markets treaded cautiously ahead of the Fed, with gold and oil swinging on inventory data and safe‑haven flows.

• The Fed cut rates by 25bp as expected, with projections hinting at more easing into year‑end.

• U.S. equities reversed early gains to close slightly lower after Powell’s press conference.

🔥BoC Cut Rates as Expected, Further Cuts Likely

• Overnight rate lowered from 2.75% to 2.50%, the first cut since March.

• Labor market weakness, falling exports, and moderating inflation drove the decision.

• Analysts expect another cut in December as growth risks mount.

📊 6 Things Traders Need to Know About the September FOMC

• Fed cut rates by 25bp, citing labor market risks.

• Lone dissent: Governor Miran pushed for a 50bp cut.

• Dot plot shows a narrow majority for two more cuts this year.

• Inflation seen staying above 2% until 2027; unemployment projected to rise.

• Powell called it a “risk management cut,” balancing inflation vs. jobs.

• USD whipsawed but ended broadly higher after the press conference.

  Read the Full Breakdown

This issue captures the heart of central bank season: the BoC easing cycle is underway, while the Fed is tiptoeing into cuts with a divided committee. For traders, the opportunity lies in navigating the divergence — and staying nimble as currencies swing on every word from policymakers.

Happy Trading!

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