Dollar Plummets as Markets Brace for Double or Even Triple Fed Rate Cuts This Year
| Action Insight Weekly Report 7-13-24 |
| Dollar Plummets as Markets Brace for Double or Even Triple Fed Rate Cuts This Year |
Dollar weakened broadly last weeks market expectations on Fed's policy path shifted dramatically. The June US CPI report continued the narrative painted by the previous week's Non-Farm Payroll data, both suggesting further cooling in economic activity and easing price pressures. These developments have firmly positioned a September Federal Reserve rate cut as a near certainty in the minds of traders, with additional expectations for another reduction in December. Some aggressive market participants are even betting on an additional reduction in November. This shift in sentiment also boosted US stocks to new record highs and hammered treasury yields. However, despite its significant movement, Dollar was only the second worst performer, with the New Zealand Dollar taking the bottom spot. Kiwi plunged following the surprisingly dovish statement from RBNZ, which accompanied their decision to hold interest rates unchanged. The hint of future monetary easing has markets betting on a rate cut by RBNZ as early as November. Meanwhile, Canadian Dollar was the third worst performer. Conversely, Japanese Yen emerged as the week's star performer, buoyed by what appeared to be a strategically timed market intervention by Japan. The next move for Yen will depend on whether market participants join in to further boost its value, a development that might hinge on BoJ's meeting later this month. Meanwhile, British Pound secured its position as the second strongest performer, rallying after expectations for an August rate cut by BoE were dashed by comments from a top BoE official and stronger-than-expected UK economic data. Euro ranked third in performance, while Aussie and Swiss Franc ended mixed in the middle... |
EUR/USD Weekly Outlook EUR/USD's rally continued last week and hit as high as 1.0910. Initial bias stays on the upside this week. Firm break of 1.0915 will resume howl rise from 1.0601 to 100% projection of 1.0601 to 1.0915 from 1.0665 at 1.0979. On the downside, below 1.0859 minor support will turn intraday bias neutral first. | |
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