Since the Fed indicated last month a willingness to possibly cut interest rates soon, the US and China have resumed trade negotiations and a lot of economic data have come out, including a very strong US jobs report and signs of firming inflation. What does it all mean from the Fed’s view? Not much, according to Chairman Jerome Powell. “Since [the Fed’s June 19 statement], based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook,” Powell said. “Inflation pressures remain muted.”
Net result:
The U.S economic outlook has not improved in recent weeks, an indication that the Fed could be prepared to cut its benchmark short-term interest rate when officials meet later this month.
Reaction:
USD (€1.1240, ¥108.71, £1.2500 and C$1.3101) under pressure, equities higher, yields lower and gold futures higher.
More to follow
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Dean Popplewell
He has a deep understanding of market fundamentals and the impact of global events on capital markets.
He is respected among professional traders for his skilled analysis and career history as global head
of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean
has played an instrumental role in driving awareness of the forex market as an emerging asset class
for retail investors, as well as providing expert counsel to a number of internal teams on how to best
serve clients and industry stakeholders.
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