September Fed cut likely before US election tsunami hits FX
July 3 (Reuters) - With political betting markets showing former President Donald Trump as a clear favourite to return to the White House, the Federal Reserve may be minded to reduce interest rates in September rather than keeping them on hold again.
A Fed rate cut on Sept. 18 - the last U.S. monetary policy decision before the presidential election - would front-run the possibility for stickier U.S. inflation if Trump wins on Nov. 5, given the big tariff hikes he has promised, which could have a material impact on foreign exchange rates.
Tuesday's dovish comments from Fed Chair Jerome Powell suggest he is keen to cut rates in September.
Markets currently see a 70% chance of the Fed reducing rates on Sept. 18, with a cut fully priced for Nov. 7 - two days after the election. FEDWATCH
There is still scope for a twist in the presidential election tale, as President Joe Biden faces growing doubts from Democrats about his 2024 re-election bid.
Related comments: nL1N3IU09G nL1N3IQ0AQ
For more click on FXBUZ
(Robert Howard is a Reuters market analyst. The views expressed are his own)
</body></html>Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
