USDIDX gains 0.1% supported by hawkish Fed Bostic

7:45 pm 18 April 2024

US dollar futures (USDIDX) are gaining more than 0.1% today, supported by comments from Federal Reserve member Raphael Bostic. Today's U.S. unemployment claims data pointed to a still very low reading, suggesting a fairly strong labor market. Moreover, an even better picture of the market was shown today by the Fed's Philly regional data. Fed Williams comments today were also quite hawkish (not as hawkish as Bostic). J.P. Morgan analysts indicated that the chances of no rate cut are high, and the chance of a rate hike, low. On the other hand, IMF director Georgieva told that she is still optimistic the Fed is able to cut rates in 2024, and 'we shouldn't gear up for rapid decline in rates'.

Fed Bostic

  • We can keep rates unchanged as long as the labor market is doing well

  • We will probably be not able to cut rates before the end of the year

  • I expect the economy to continue to grow, despite our monetary policy

  • I do not expect a recession, in my forecast scenarios
  • The road to 2% inflation will be more bumpy and longer than people expected
  •  Inflation is too high, and we still have a ways to go. It is going where we want it to go, but it's slow
  • I'm comfortable being patient

Fed Williams

  • The Fed is data-dependent, and the data have been very good.
  • I don't feel urgency to cut rates.
  • Rate cuts will be determined by economic activity.
  • Fed rate hikes are not my baseline forecast.
  • If data called for higher rates, the Fed would hike.
  • The economy is back on the pre-pandemic growth track. 

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Markets expect just once Fed rate cut this year, with one fully priced in November 2025. According to the March economists poll, the Federal Reserve will cut rates by 50 basis points in 2024 (50 of 100 economists). 34 say by more than 50 bps and only four say no cuts. Source: Bloomberg Financial LP

USDIDX (M15 interval)

Source: xStation5

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