After a long period of time, the strong US dollar is once again dominating Asia. The Fed's "risk management" interest rate cuts are catalyzing a US dollar counterattack.

After the Federal Reserve announced a 25 basis point rate cut early Thursday Beijing time, Wall Street analysts generally expressed that the decision for the Federal Reserve to only cut 25 basis points, rather than the 50 basis points that some traders had bet on, along with the cautious expectations for the interest rate path in 2026, will help to strongly support a rebound in the weak US dollar that has persisted for most of this year. This may also lead to intense pressure on the exchange rates of various Asian countries' currencies in the short term. Analysts also noted that tech stocks, which have been soaring recently, may face profit-taking and a downward trend of "buy the rumor, sell the fact." Analysts generally believe that the latest rate cut decision by the Federal Reserve will actually help to support the US dollar and put pressure on the currencies of various Asian countries. Wells Fargo Securities LLC stated after the Federal Reserve announced the rate cut decision that the strengthening of the US dollar after the announcement was widespread and that Asian currencies were unlikely to escape this impact. Sumitomo Mitsui Trust Bank Ltd. stated that the dollar may continue to rise to 147 yen per dollar, although market's long-term pessimism towards the dollar may limit its upside potential. The Fed's first rate cut in nine months, in terms of magnitude and timing, undoubtedly met market expectations. The most closely watched FOMC dot plot shows that the median rate forecast implies three rate cuts by the Federal Reserve this year, one more than in the previous dot plot, with a forecast for one more cut next year. However, the specific forecast data from the latest FOMC rate dot plot suggests that future Fed rate decisions may trigger greater divergences: out of 19 Fed officials, 7 expect no more rate cuts this year, while another 2 only support one more cut, indicating that the average number of cuts may be dragged down by some extremely low expectations. In essence, this puts the Federal Reserve's plans for one or two more rate cuts within the year in balance. Most officials believe that given the current robust (albeit slightly slowing) outlook for the US economy, there is no need for further significant rate cuts next year. Powell also mentioned during the press conference that the transmission of tariffs to inflation will continue until next year, but the transmission speed to consumers may be slower than market expectations. What's more, Powell explained during the press conference that this rate cut is a "risk-management" rate cut, aiming to adjust the monetary policy from a relatively tight level to a more neutral position, and emphasizing that the Fed will continue to make "meeting-by-meeting" decisions based on the latest data. Here are some selected comments from top financial analysts: Wells Fargo Securities LLC (Brendan McKenna, Emerging Markets Strategist, New York): "The broad-based strength of the US dollar that emerged after the FOMC meeting will be difficult to exclude Asian currency exchange rates from unless the Federal Reserve releases new dovish information (which is unlikely). The Federal Reserve - particularly Powell during the press conference - seems somewhat equivocal about further rate cuts. Particularly we are interpreting the 'risk management cut' as slightly hawkish, and the overall exchange rate trend of Asian currencies may react to this." "Some high-beta currencies are most likely to be sensitive. Therefore, in this sense, the South Korean won and Indonesian rupiah, and perhaps to a lesser extent the Philippine peso. With Indonesia's latest policy direction, the rupiah may be the most sensitive." Sumitomo Mitsui Trust Bank Ltd. (Takeru Yamamoto, Senior Trader, New York Market): After the FOMC was expected to cut interest rates twice more this year, the dollar was initially sold off after the announcement, but "the dollar was subsequently heavily bought back by market traders, as the market only expects one more rate cut next year, and Federal Reserve Chairman Powell's press conference remarks were interpreted as slightly hawkish." "Although the dollar against the yen may rise to the level of 147 yen along the current trend, expectations of future rate cuts still weigh on the dollar bull market, and the pessimism towards the dollar remains strong, limiting the upside potential." AT Global Markets (Nick Twidale, Chief Market Analyst, Sydney): "The Federal Reserve is basically in line with market expectations. So I think Asian forex markets will continue some of the momentum of the US session, but the overall reaction is relatively muted, so we may see some pullback in the markets in the coming days." "Some investors were hoping for a more dovish Federal Reserve to push the market higher, but what we got was only the content that the market had already priced in. I believe we need another incremental catalyst to push the market to new highs, and this time the Federal Reserve did not provide that, so we may see some profit-taking, especially in the global tech sector." TD Securities Inc. (Jayati Bharadwaj and other market strategists from New York): "We still hold a bearish view on the dollar and consider any technical rebound as an opportunity to sell high. Economic growth outside the United States is being maintained and looks better than the US. Coupled with the Fed's loose monetary policy that will not end immediately, this could create a positive risk appetite environment, driving significantly higher-risk and rate-sensitive currencies that are currently undervalued - such as the yen and the Australian dollar." VanEck Associates Corp. (Anna Wu, Cross-Asset Strategist, Sydney Market): "This could be considered the most fully priced rate cut. It has been reflected in the FOMC rate dot plot since June. However, this does mean that the US stock market has another reason to continue its climb. I believe the impact on the Japanese market and the Bank of Japan is now quite limited, as market traders have mostly priced it in. For me, the main focus of this week is the new round of trade negotiations between China and the US on Friday." ANZ Group Holdings Ltd. (David Croy and other market strategists from Wellington): "Due to the movement of US Treasury bonds, the overall yield curve of New Zealand bonds may shift upward and become steeper, but the final outcome will depend on GDP statistics. Our feeling is that the market is expecting weak data, so if the data is better than expected, the market may have a larger reaction rather than a larger negative reaction to weaker data."