Global currency markets experienced significant volatility on Thursday as traders digested key policy decisions from major central banks. The U.S. dollar initially plummeted following the Federal Reserve’s cautious stance on future interest rate cuts but later rebounded, reflecting mixed signals from policymakers. Meanwhile, the British pound remained steady after the Bank of England (BoE) opted to maintain interest rates and slow the pace of its quantitative tightening (QT) program. The BoE reduced its annual gilt sales from £100 billion to £70 billion, aligning closely with market expectations. Marion Amiot, chief UK economist at S&P Global Ratings, noted that the BoE is unlikely to ease monetary policy further this year. The euro saw modest gains, rising 0.1% against the pound, while gilt yields dipped slightly. In Norway, the Norges Bank cut interest rates by 25 basis points, as anticipated, signaling potential further reductions. The Norwegian crown remained stable despite the rate cut. In Japan, the yen weakened ahead of the Bank of Japan’s (BOJ) policy decision on Friday, with markets expecting no immediate rate hikes but pricing in a possible increase by March 2024. Elsewhere, the New Zealand dollar fell to its lowest level since September 8 after data revealed a 0.9% contraction in GDP for the second quarter, fueling speculation of policy easing by the Reserve Bank of New Zealand. Analysts remain divided on the implications of the Fed’s actions, with some viewing the rate cut as the first in a series, while others interpret Chair Jerome Powell’s comments as less dovish. The dollar index, which measures the greenback against a basket of major currencies, initially dropped to its lowest since February 2022 but later recovered, ending the day steady at 96.96. The currency markets’ turbulence underscores the ongoing uncertainty surrounding global economic conditions and central bank policies.