26/07/2024
Written by: Ian Morley
Summary:
Fed Bostic’s recent statements indicate a projected rate cut in the third quarter of this year, followed by a pause to assess its economic impact. Market sentiment reflects an 80% probability of a rate cut in June, with potential subsequent cuts in September and November. This led to a reversal of earlier losses for the USD during European trading hours, while GBP experienced gains ahead of the Spring Budget announcement.
Speeches:
· USD: Fed Barr
Market Insight:
Final PMI numbers today are expected to have minimal impact on FX flows, barring any significant revisions to initial estimates. ISM services data from the US will serve as a crucial indicator of the country’s economic resilience ahead of Friday’s job report. Last week’s lower-than-expected ISM manufacturing figures placed pressure on the USD. A similar trend in services could prompt attempts to test recent highs on GBPUSD and EURUSD.
Outside the financial markets, it’s Super Tuesday in the US, where 15 states will hold Republican and Democratic primaries. Any indication favouring Donald Trump’s nomination could potentially bolster the USD, based on observed price action this year.
Analysis:
The focus of today’s market attention is on the ISM services data, which will shed light on the resilience of the US economy. Analysts will closely examine the job component for insights into inflationary pressures. Additionally, this print will influence rate expectations, especially in light of Bostic’s recent remarks advocating for a pause in rate adjustments to gauge their economic implications.