Federal Reserve Chairman Powell’s measured consideration of the central bank’s role in promoting economic growth in an atmosphere of trade conflict, market volatility and Presidential admonitions satisfied no one. 

Stocks were pummeled by trade war fears and the rising chances that the conflict will lead to a US and global recession.

Early in the day China announced tariffs on $75 billion of US exports.  Trump responded by calling on US companies to find alternatives to China.  He was scathingly critical of the Fed for inaction after Powell’s speech in Jackson Hole.

The 2-10 Treasury spread inverted again and was trading even at 3:15 Pm in New York. The dollar sank after the 10:00 am Powell speech losing about 40 points against the euro and more than a figure versus the yen.

The Fed is reaching for its historical role as a guide in the trade dispute. But as Mr. Powell admitted, there is little precedent for such a situation.

The turmoil created by the trade war and its rhetoric has created an atmosphere that will leave the Fed little choice.  The Fed has staked its rate policy on maintaining the US expansion and insulating the economy as best it can from a potential downturn.

The more markets flail and shudder from the trade rhetoric, the greater the threat to the positive psychology of the US expansion. Businesses have already succumbed to the trade war. Will the consumer be next?   Presidents Trump and Xi  are creating a stronger case for Fed action.

In the end the governors will likely do what the markets and the President want, reduce rates faster and farther than at any time since the financial crisis.  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD extends recovery beyond 1.1050 on Saudi output headlines

News indicating that Saudi Arabia’s oil output would return to normal quicker than expected, lifted the market’s mood and weighed on the greenback. EUR/USD underpinned by improved Business Sentiment according to the German ZEW Survey.


GBP/USD rallies past 1.2500, reaches fresh multi-week highs

The GBP/USD pair is trading above the 1.2500 figure, getting a boost from easing demand for the greenback following relief news related to the crude oil market after the weekend attack to Saudi facilities.


USD/JPY drops back to recent range after hitting fresh 6-week highs

The USD/JPY pair spiked to 108.35, reaching the highest intraday level since August 1st and then pulled back to the 108.15/20 area.


Saudi Arabia's oil output to be fully back online in next 2-3 weeks

Citing two sources briefed on the Saudi oil operations, Reuters reported that Saudi Arabia's oil output would return to normal levels quicker than initially thought.

Read more

Gold struggles to find direction, trades in tight range near critical $1,500 handle

The XAU/USD pair struggling to make a decisive move on Tuesday and continues to trade in a relatively tight range around the $1,500 handle.

Gold News

Forex Majors