Deutsche Bank analysts note that as per expectations, the fed funds rate was cut by 25bps albeit with a 7-3 split (two in favour of no change and one in favour of a 50bp cut) with the IOER cut by 30bps however the dots were the main talking point initially.

Key Quotes

“The signal is a somewhat divided committee. The median dot shows no further cuts in the remainder of 2019 or 2020. However, 7 of the 17 dots favour one more 25bp cut this year, albeit no-one expects more than a 25bp cut. There are also 8 dots in 2020 which favour a fed funds rate 25bps below where it is now. What is interesting however is that there are 5 dots which are 25bps above the current rate for this year and 7 above the current rate for 2020. In fact, one of those in 2020 is 50bps above the current rate. So, one way of summing that up is that the doves aren’t particularly dovish and there is a clear group of hawks on the committee. The sharp sell-off across rates immediately following the statement certainly reflected that.”

“As for the statement itself, there was very little change. The reference to “muted inflation pressures” was kept despite CPI strengthening in recent weeks while the only real change of note was the reference to household spending rising at a “strong pace”. The summary of economic projections was a wash with the exception of 2019 growth being upgraded to 2.2%. As for Powell’s press conference, unlike previous meetings there weren’t all that many talking points.”

“The general feeling was that Powell was very considered and balanced in his responses with a broad aim of not wanting to guide the market. That was particularly the case when going out of the way not to repeat the mid-cycle adjustment language. Our economists summed it up by saying that Powell reinforced the message that the Fed that continues to see a favourable baseline outlook, albeit one buffeted by significant downside risks from weak global growth and trade policy uncertainty. They continue to expect 75bps more of rate cuts through Q1 next year with a possible announcement also of a resumption of balance sheet growth next month.”

 

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD nears weekly highs as risk-on returns

The EUR/USD pair was dragged higher by a soaring Pound, now hovering around 1.1040. The market is all about sentiment, and this last dependent on Brexit and the US-China trade relationship.

 

EUR/USD News

GBP/USD pulls back from multi-month top amid mixed Brexit news

With Brexit tensions on paramount, GBP/USD awaits confirmation of recent rally while taking a step back to 1.2760 amid the initial Asian trading session on Wednesday. DUP, Tory and Irish members seem to dislike the UK PM’s Brexit deal.

GBP/USD News

USD/JPY in search of a firm direction, stuck in a range below mid-108.00s

The prevalent risk-on mood weighed on the JPY’s safe-haven status and extended support. A sharp fall in the US bond yields undermined the USD and failed to impress bullish traders.

USD/JPY News

Gold slumps to $1,480 area on Brexit hopes

The troy ounce of the precious metal continued to weaken in USD terms in the American trading hours as markets cheered reports claiming that the European Union (EU) and the United Kingdom (UK) are closing in on a draft Brexit deal that could be announced before the end of the day on Tuesday.

Gold News

Cryptos: Incumbents don't know to play well

The Libra project led by Facebook remains on track despite the first defections. Those who have abandoned the project are mostly payment gateways. Bitcoin's lack of tone weighs on Ethereum's mood.

Read more

Forex MAJORS

Cryptocurrencies

Signatures