Following the Federal Reserve's announcement of a 25 basis point rate cut in the early hours of Thursday Beijing time, Wall Street analysts widely indicated that the Fed's decision to cut rates by only 25 basis points rather than the 50 basis points some traders had wagered on, along with the Fed's cautious outlook for the 2026 rate path, will help strongly support a rebound in the dollar that has been persistently weak for most of this year. This could potentially cause Asian currencies to face severe pressure in the short term, while analysts also suggested that technology stocks, which have recently surged, may face profit-taking and a "buy the rumor, sell the news" downward trend.

Analysts widely expressed that the Fed's latest rate cut decision would actually help support the dollar and pressure Asian currencies. Wall Street financial giant Wells Fargo stated after the Fed announced its rate decision that the dollar strengthening following the Fed's 25 basis point cut was broad-based, and Asian currencies were unlikely to escape this impact. Sumitomo Mitsui Trust Bank indicated that the dollar could continue its upward momentum to 147 yen per dollar, although long-term bearish sentiment toward the dollar may limit its upside potential.

The Fed's first rate cut in nine months, both in magnitude and timing, undoubtedly aligned closely with market expectations. The most closely watched FOMC dot plot showed that the median rate forecast suggests the Fed will cut rates three times this year, one more than the previous FOMC dot plot, with expectations for one more cut next year. However, the specific forecast data from the latest FOMC dot plot suggests future Fed rate decisions may trigger greater divergence: among 19 Fed officials, 7 expect no further cuts this year, while another 2 support only one more cut. In other words, if not for such low expectations pulling down the average, the dot plot's median-based final result for one or two more cuts this year is essentially evenly matched.

Most officials believe that under the current outlook of robust U.S. economic vitality (albeit with slight deceleration), there is no need for further significant rate cuts next year. Powell also mentioned in the press conference that he believes tariffs' transmission to inflation will continue into next year, though the transmission speed to consumers is slower than market expectations.

More importantly, Powell explained at the press conference that this rate cut was a "risk management" cut, aimed at adjusting monetary policy from the previously "moderately restrictive" relatively stringent level to a more neutral position, emphasizing that the Fed will maintain a "meeting-by-meeting" approach, flexibly adjusting policy based on the latest data.

Here are selected excerpts from top financial market analysts' latest comments:

Wells Fargo Securities LLC (Brendan McKenna, New York Emerging Markets Strategist): "The dollar strength displayed after the FOMC meeting is broad-based, and unless the Fed releases new dovish information (which is unlikely), it's hard to imagine Asian currency exchange rates being excluded from this dollar rally. The Fed—especially Powell at the press conference—was somewhat noncommittal about further rate cuts. Particularly as we interpret the 'risk management cut' as slightly hawkish, Asian currencies' overall exchange rate movements may react accordingly."

"Some high-beta currency pairs may be most sensitive. Therefore, in this sense, the Korean won and Indonesian rupiah, and to a lesser extent possibly the Philippine peso. Given Indonesia's latest policy mix direction, the rupiah may be the most sensitive."

Sumitomo Mitsui Trust Bank Ltd. (Takeru Yamamoto, Senior Trader in New York): Due to the FOMC expecting two more rate cuts this year, the dollar was initially sold off after the announcement, but "the dollar was subsequently heavily bought back by market traders because the market expects only one cut next year, and Fed Chairman Powell's press conference remarks were interpreted as slightly hawkish."

"Although the dollar against the yen may rise to the 147 yen level following the current trend, expectations for future rate cuts still pressure the dollar bull market, while bearish sentiment toward the dollar remains strong, thus limiting upside potential."

AT Global Markets (Nick Twidale, Chief Market Analyst in Sydney): "The Fed basically stayed in line with market expectations. So I think Asian forex markets will continue some of the U.S. session trends, but the overall reaction is relatively muted, so we may see some pullback in the coming days."

"Some investors previously hoped to see a more dovish Fed to drive markets further upward, but we only got what the market had already priced in. I think we need another incremental catalyst to drive markets to new highs, and the Fed didn't provide that this time, so we may see some profit-taking momentum, especially in the technology sector of global stock markets."

TD Securities Inc. (Jayati Bharadwaj and other market strategists from New York): "We remain bearish on the dollar and view any technical rebounds as opportunities to sell on strength. Economic growth outside U.S. markets is maintaining and looks better compared to the U.S. Combined with the Fed's accommodative monetary policy not ending immediately, this could create a positive risk appetite environment, driving significant gains in risk-sensitive and interest rate-sensitive currencies that are currently undervalued—such as the yen and Australian dollar."

VanEck Associates Corp. (Anna Wu, Cross-Asset Strategist in Sydney): "This could be said to be the most fully priced-in rate cut. It's been reflected in the FOMC dot plot since June. However, this does mean U.S. stocks have another reason to continue climbing. I think the impact on the Japanese market and Bank of Japan is now quite limited, as market traders have basically priced it in. For me, this week's main event is Friday's new round of trade negotiations between China and the U.S."

ANZ Group Holdings Ltd. (David Croy and other market strategists from Wellington): "Influenced by U.S. Treasury movements, New Zealand's overall yield curve may shift upward and become steeper, but the final outcome will depend on GDP statistics. Our sense is that the market expects weak data, so if data is better than expected, the market may have a larger reaction rather than a larger negative reaction to weaker data."