The U.S. Dollar is trading in weak ranges across the board as markets embrace the likelihood of stimulus in the form of interest rate cuts from the Federal Reserve
Overview
While some banks are already predicting a few slashes to come for the remainder of the year, investors and traders are jumping into risk-taking for other market classes. Tomorrow cannot arrive faster as all eyes are on the Fed’s tone as the first rate cut of the year is guaranteed, but other moves may run into hesitation.
Large institutions such as Deutsche Bank are already making calls for a 25bps reduction for each of the next three Fed meetings. Such thinking may be challenged by statements from Fed Chairman Jerome Powell during his press conference. One thing to look for tomorrow is for consensus on the decision and if the statements suggest this is a “hawkish cut,” one that may not be easily followed by another one if inflation becomes a concern again. We think the Fed will send a message of cautiousness as it lowers borrowing costs, something that could prevent the Buck from suffering too much pain against its peers.
What to Watch This Week…
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The complete Economic Calendar can be found here.
GBP ⇑
The single currency, after taking heavy losses against USD to open this year, is attempting to claw back some ground this morning and has gained just shy of a quarter of a percent against USD. The EUR/USD pair is now sitting much closer to prices last seen just before both the Fed and ECB meetings last month, more in line with the macroeconomic data out of the region. French CPI this morning showed inflation increased 4.1% annually, with Germany’s year-over-year inflation slightly lower at 3.8%.
