- Yesterday, the Fed did not surprise the markets with its decision, cutting rates by 25 basis points. The projections remained largely unchanged; the bank still expects inflation to stay around 3% this year and in the years ahead. The U.S. GDP forecast was revised slightly upward.
- Powell emphasized that the labor market is clearly weakening, and the Fed will not passively watch this development. However, he noted that the central bank does not intend to rush into aggressive policy easing. Markets are currently pricing in an additional 50 bps of cuts this year and 25 bps next year.
- U.S. index futures are trading higher after the rollover and reacted moderately positively yesterday to both Powell’s comments and the Fed’s decision. The EUR/USD pair has retreated from around 1.19, sliding to 1.178 after Powell’s speech, while Bitcoin has risen above $117,000.
- Today, the key macro events will be the Bank of England’s rate decision at 11 AM GMT. and U.S. labor market data at 12:30 PM GMT. (jobless claims) and US Philly Fed Index. In addition, after the U.S. session, logistics giant FedEx will publish its earnings. Its shares have been performing very poorly over the past several quarters.
- Volatility in the agricultural and energy commodities markets is very limited this morning. Precious metals are under clear pressure, weighed down by profit-taking, with silver losing nearly 1%.
- The AUD/USD pair is performing poorly, falling more than 0.4% following Australia’s labor market data. The unemployment rate remained unchanged at 4.2%, in line with expectations, but employment fell by 5.4 thousand in August, compared with a market forecast of a 21 thousand increase and a previous gain of 24.5 thousand.
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