Considerations on the scale of interest rate cuts in the United States are one of the most important market threads in July. At the moment, there is no day to mention the expectations of the Fed`s next actions, as they are the ones that mainly affect US currency.
Recall that this month the meeting of the Federal Open Market Committee (FOMC) will be held on July 30-31. It is noteworthy that during this meeting the latest macroeconomic projections will not be published, but a press conference will take place. Earlier, before the changes introduced, the conference took place only during the meetings with the publication of macroeconomic projections. So if there were no changes, that the conference is now taking place every meeting, maybe the cut would take place at other times.
Nevertheless, investors expect potential interest rates cut in the US with 100 percent probability. The only question is whether the cut will be 25 or 50 basis points. Recently, the chances for a cut by half a percentage point have dropped to less than 25 percent, which seems to help the dollar, which has strengthened to major currencies. Investors are less and less convinced of the large scale of cuts, because even the Fed President of St. Louis James Bullard, one of the most dovish central bank decision makers, did not support such a strong easing of monetary policy on Friday, and said he was in favor of a quarter-point reduction.
What's more, there were more optimistic information from the east. According to the Chinese official Xinhua news agency, some Chinese companies are applying for tariffs exemptions because they are asking for the purchase of agricultural products from the USA. In addition, according to Chinese state media, direct negotiations between leading trade negotiators from China and the US may follow soon after many goodwill gestures from Beijing over the weekend.
Today in the macroeconomic calendar there are no scheduled releases of important data from economies, so trade can be very calm. Only the second half of the week may bring greater volatility due to, among others meeting and the decision of the European Central Bank on 25 July.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
