USD fell overnight. Higher jobless claims and the WSJ article on Fed's rate cut dilemma revived markets' confidence to price in a jumbo cut at Sep FOMC, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Risks are now skewed to the downside
“Probability of 50bp cut for Sep FOMC is at 46% vs. 37% probability a day ago. In particular, the article carried an interview with Jon Faust. He said that the amount of cuts over the next few months ‘is going to be a lot more important than whether the first move is 25 or 50, which I think is a close call’. He also said that the economy is in a spot that calls for a pre-emptive 50 but his ‘preference would be slightly starting with 50’. He added that Fed could manage concerns about spooking investors with a larger cut by providing ‘a lot of language around it that make it not scary’ and then ‘it wouldn’t be a sign of worry’.”
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
Hot
No comment on record. Start new comment.