Threat of recession to force Fed to start a full-blown cutting cycle in 2020 - Rabobank


"The escalation of the US-China trade war and the resulting turmoil in financial markets has finally opened the Fed’s eyes that the hiking cycle is over and that the next move should be a rate cut," note Rabobank analysts ahead of next week's FOMC meeting.

Key quotes

"With the lack of progress in the US-China trade negotiations, the weak Employment Report for May and disappointing inflation data the FOMC now has all it needs to make an insurance cut. However, they may prefer to wait until after the G20 meeting before pulling the trigger. Therefore, we expect an insurance cut in July."

"In the meantime, we are likely to see a conditional statement at the June meeting promising an insurance cut if there is no significant improvement in the US trade relationships."

"What’s more, given the bleak outlook for the US-China trade negotiations, there is a significant risk of additional insurance cuts before the end of the year. However, we think that they will prove to be insufficient. More likely, the threat of a recession will force the Fed to start a full-blown cutting cycle in 2020."

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: positive mood could prevent the collapse

The shared currency has remained under selling pressure on Friday, amid mounting speculation the ECB will announce a larger-than-anticipated stimulus package next September. EUR/USD capped by a Fibonacci resistance at 1.1110, yearly low at risk.

EUR/USD News

GBP/USD: economic disruption on a no-deal Brexit to weigh on Sterling

The GBP/USD pair has closed the week with gains, a handful of pips below the 1.2150 level. The Pound advanced for a third consecutive day, helped by some headlines indicating that Jeremy Corbyn, has been in talks with the Scottish National Party.

GBP/USD News

USD/JPY: short-term advance to be capped by long-term jitters

The USD/JPY has recovered some ground these last few days, to close the week at 106.35. Still, it posted a lower low and a lower high when compared to the previous week, as the Yen benefited from its safe-haven condition on mounting concerns about a US recession. 

USD/JPY News

Gold gives back territory towards a 23.6% retracement

Gold prices were a touch lower by the end of the week, falling -0.68% having travelled between a high of $1,528.00 to a low of $1,503.87, ending the NY session around $1,513. 

Gold News

Four Signs of A Bear Market

I am a believer that the Universe gives you signs. That may sound a bit crazy, but these three charts are three more signs of a bear market. The top chart is the GLD exchange traded fund.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •