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  • 50bp cut from the Fed as it looks to move rates to neutral quickly and avert recession

    From think.ing.com

    The US Federal Reserve wants to get to neutral quickly as it increasingly prioritises potential job weakness at a time when it is more comfortable with the inflation backdrop. We look for a further 150bp of cuts by next summer, but the risks are skewed towards the central bank doing more. So we get the 50bp interest rate cut that the market had been gunning for despite the economy being described as expanding at a "solid pace" in the accompanying statement. Expectations of a larger move had been building over the past week despite core inflation coming in at a relatively “hot” 0.3% month-on-month and the August ... (full story)

  • #1
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  • Sep 18, 2024 10:29pm Sep 18, 2024 10:29pm
  •  Trader#1741
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Soft landing....
  • #2
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  • Sep 18, 2024 10:48pm Sep 18, 2024 10:48pm
  •  Trader#836C
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but with a higher interest rate cut, why did dxy rise and jpy fall? I thought should be the other way round. The same thing happened to euro when they had cut their interest rates recently too. I noticed euro went up but jpy went down. It makes no sense to me. Can someone please explain?
  • #3
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  • Sep 18, 2024 11:33pm Sep 18, 2024 11:33pm
Quoting Guest
but with a higher interest rate cut, why did dxy rise and jpy fall? I thought should be the other way round. The same thing happened to euro when they had cut their interest rates recently too. I noticed euro went up but jpy went down. It makes no sense to me. Can someone please explain?
it's just manipulative game from Market Maker, no one knows the reason exactly why it can be like that, so best we can do when we're not sure for taking any position is wait till settles down.
  • #4
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  • Sep 18, 2024 11:52pm Sep 18, 2024 11:52pm
  •  Trader#77DC
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Quoting Guest
but with a higher interest rate cut, why did dxy rise and jpy fall? I thought should be the other way round. The same thing happened to euro when they had cut their interest rates recently too. I noticed euro went up but jpy went down. It makes no sense to me. Can someone please explain?
ups and downs happen in the market. nothing goes straight. there is always zigzag correction.
  • #5
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  • Sep 19, 2024 3:19am Sep 19, 2024 3:19am
  •  Trader#E175
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Quoting Guest
but with a higher interest rate cut, why did dxy rise and jpy fall? I thought should be the other way round. The same thing happened to euro when they had cut their interest rates recently too. I noticed euro went up but jpy went down. It makes no sense to me. Can someone please explain?
Its because it was a rather hawkish cut. Powell emphasized that cut does not mean that inflation is defeated and he said that he doesnt see another phase coming where rates are on such a low level like they were the last decade. All in all the FOMC positioned itself rather hawkish than extremely dovish.
  • #6
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  • Sep 19, 2024 5:51am Sep 19, 2024 5:51am
  •  Trader#C1A2
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Market Makers cleaned most short stops on top of DXY before it is taken for a further ride down, like we see now. MM dont like dumb money (retail traders) to ride with them. As this is a zero trade, they need them and their liquidity on the other side of the trade. That is why 90+% of all retailers lose money in FX and also are called dumb money (no offence).
  • #7
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  • Sep 19, 2024 6:33am Sep 19, 2024 6:33am
  •  Trader#81ED
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Quoting hans91
{quote} it's just manipulative game from Market Maker, no one knows the reason exactly why it can be like that, so best we can do when we're not sure for taking any position is wait till settles down.
This is also said in the full text:

"The lack of pushback on market pricing from the Fed in sourced media articles suggested it was inclined to go boldly and in the end there was only one dissenter – Governor Michelle Bowman, who voted for a 25bp cut. Being "strongly committed" to supporting maximum employment and returning inflation to target continues to be the theme, but it is clear where the priorities lie; get policy back to a more neutral setting to avert the risk of recession given growing comfort that inflation is on the path to 2%."
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