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Forex Today: Markets Expecting 0.50% Fed Rate Cut
Adam Lemon
| Created on September 17, 2024
- Markets are currently dominated by anticipation of the US Federal Reserve’s meeting tomorrow, at which it is universally expected to begin a process of cutting its interest rate for the first time in 4 years. Yesterday, sentiment has shifted in favour of a 0.50% cut, with 67% expecting this compared to 33% expecting a 0.25% cut, according to the CME FedWatch tool. This has pushed the US Dollar lower and certain other currencies and assets higher, notably Gold and the Japanese Yen, which again made fresh long-term highs yesterday. However, recent hours are seeing the Dollar gain a bit while Gold and the Yen decline. It is very possible that we will see consolidation today in most markets ahead of tomorrow’s Fed release.
- Gold is looking long to medium-term bullish and is still trading close to the record high it made yesterday just below $2,600. Gold is trading in blue sky and could keep rising higher and higher. Trend traders will be interested in being long of Gold.
- The Japanese Yen continued to strengthen yesterday as a currency with a divergent monetary policy from the dovish moves to cut rates which are being seen almost everywhere else. The USD/JPY currency pair traded at a new 1-year low near ¥139.50 yesterday but has recovered a little in recent hours. Trend traders will be interested in being long of the Yen.
- In the Forex market, the British Pound has been the strongest major currency today, while the New Zealand Dollar has been the weakest. However, the numbers are so small as to be effectively meaningless, and it looks likely that the big movements over the coming days will probably by in the Japanese Yen and the US Dollar.
- The US 2-Year Treasury Yield is looking bearish as the US Dollar declines – yesterday saw it trade at a new 2-year low. Trend traders will be interested in being short here if they can access this asset (micro futures contracts are available on the CME).
- There will be releases today of US Retail Sales data and Canadian CPI (inflation) data. Canadian CPI is expected to show neither an increase nor a decrease over the past month.
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