Fed's Rate Hike Locks In Tightening Cycle as Dollar Support Fades

The Federal Reserve's September rate hike has locked in the current tightening cycle, as six out of seven voting officials took a hawkish stance. This decision reinforces the central bank's restrictive policy bias, with the policy rate now standing at 3.75%-4.00%. The Bank of Japan also raised its policy rate and is expected to do so again in the fourth quarter.

The tightening cycle among central banks has led to a shift in currency positioning, with the U.S. dollar losing support. In response, funds have moved to net long positions in the Japanese yen, while sterling long positions were unwound. This trend suggests that investors are increasingly turning away from the dollar and toward other currencies.

The Securities and Exchange Commission has approved an exemption for tokenized stocks, allowing for greater flexibility in the market. Meanwhile, Bitcoin ETF flows have reached near-record levels, with seasonal buying expected in the fourth quarter. One strategy even resumed purchases, buying 950 BTC for $75.7 million.