Fed stuns markets with bumper 50 basis point rate cut
09/26/24 • 23 min
The Federal Reserve surprised markets last week, delivering a jumbo 50 basis point rate cut. Yet, the bank’s famous ‘dot plot’ of interest rate projections was moderately more hawkish than expected, which limited the downside in the US dollar. Meanwhile, the Bank of England held rates steady, emphasising again that additional cuts are likely to be gradual. This has helped propel the pound to its strongest position since the Brexit vote in trade-weighted terms.
The euro has lagged behind its UK counterpart, particularly following the collapse in this week’s Euro Area PMI figures. Does this point to another period of stagnation ahead, and could the data force the ECB to deliver back-to-back cuts? Our analysts give their thoughts in this week’s FX Talk episode.
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The Federal Reserve surprised markets last week, delivering a jumbo 50 basis point rate cut. Yet, the bank’s famous ‘dot plot’ of interest rate projections was moderately more hawkish than expected, which limited the downside in the US dollar. Meanwhile, the Bank of England held rates steady, emphasising again that additional cuts are likely to be gradual. This has helped propel the pound to its strongest position since the Brexit vote in trade-weighted terms.
The euro has lagged behind its UK counterpart, particularly following the collapse in this week’s Euro Area PMI figures. Does this point to another period of stagnation ahead, and could the data force the ECB to deliver back-to-back cuts? Our analysts give their thoughts in this week’s FX Talk episode.
We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk
Liked this show? Please leave us a review here – even one sentence helps!
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Dollar struggles amid US economic slowdown fears
The dollar has had a wretched summer thus far, as investors fret over the possibility of a US recession amid signs of a cooling in the country’s labour market. In this week’s FX Talk episode, our analysts outline whether these economic slowdown concerns are overdone, or indeed justified.
They also look ahead to a highly important period of trading in financial markets. This includes breaking down the possible implications of the August nonfarm payrolls report on Federal Reserve interest rates, while discussing the potential impact of the upcoming Harris-Trump televised debate on currency markets.
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Next Episode
How rising Middle East tensions could impact currency markets
The dollar has roared higher against most currencies since our last episode amid a confluence of supportive factors. Heightened tensions in the Middle East have fuelled safe-haven flows, while triggering a move higher in oil prices. US macroeconomic news has also taken a turn for the better, with last Friday’s nonfarm payrolls report smashing past even the most optimistic of forecasts.
In this week’s episode, we discuss the recent rally in the greenback, the FX implications for the ongoing conflict in the Middle East and the fallout from some surprisingly dovish comments from governor of the Bank of England Andrew Bailey.
We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk
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