These Comments From San Francisco FED President Should Offer Some Consolation for the USD - Forex News by FX Leaders

These Comments From San Francisco FED President Should Offer Some Consolation for the USD

Posted Tuesday, August 6, 2019 by
Skerdian Meta • 1 min read

The USD has turned bearish again now. The Buck has been pretty bearish in the last two weeks as markets were convinced that the FED would just cut interest rates once by 25 bps instead of entering a monetary easing cycle. The FED cut rates by 0.25% last Wednesday and the USD climbed higher instead of declining. But, the escalating trade war has reversed it down now.

Although the case for the FED cutting rates further in the coming months remains open as global economy continues to be pretty weak, San Francisco FED president Mary Daly is not in favour of doing so. She made a few comments earlier which you can find below:

  • Aggressive rate cuts not warranted without evidence of a stronger economic downturn
  • Global growth headwinds justified last week’s rate cut
  • Trade uncertainty has amplified, could chill business investment
  • Doesn’t see the economy heading into a recession
  • Continued headwinds from trade, lower policy rates from other central banks could justify lower rates

The USD is trading the trade war right now and the rhetoric between US and China, but once the markets are out of this mode, traders will turn back to trade the central banks. The odds of further cuts now increase after the trade war escalates again. These comments are not particularly hawkish, but they don’t point to further easing by the FED any time soon, which should turn hawkish for the USD.

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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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