Daily Alert – Thurs 1 Aug: The Fed produces the rarest of things – a hawkish rate cut

Mark NugentAug 2019, Daily Alert

Daily Alert – Thurs 1 Aug: The Fed produces the rarest of things – a hawkish rate cut

Now that the dust has settled after last night’s Fed rate cut, the general view is that the rate cut was hawkish (hawks normally raise rates). Why? The presence of dissenters amongst the Fed voters and Powell’s statement that this is “not the beginning of a lengthy cutting cycle”. As you would expect with a hawkish position, the USD rose and equities fell.

I took a EURUSD short at the close.

Today at the Bank of England’s Super Thursday, Gov Carney reduced near-term GDP and CPI forecasts relative to prior, although he also forecast both measures exceeding prior forecasts at the end of the forecast horizon. The GBP turns down.

The USD and JPY are strong and the EUR, GBP, AUD and NZD are weak. GOLD continues down on the hawkishness and strong USD, and equities are rallying after yesterday’s Fed-inspired fall.

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