09/09/2024
Written by: Ian Morley
Summary:
Yesterday markets continuing to sell off aggressively over fears of a potential global recession. Expectations for interest rate cuts in the US rose from 1% to 1.4% by the year’s end, driven by the belief that the Federal Reserve would need to act decisively to prevent a recession in the US. The USD saw significant declines, with EURUSD reaching 8-month highs and the USD index also hitting 8-month lows. The GBP had a challenging day due to extreme risk aversion in the markets, with GBPEUR hitting lows not seen since May.
Market Insight:
Markets are somewhat calmer this morning, with Asian equities rebounding and recovering much of yesterday’s losses. Interest rate expectations have also eased, with markets now anticipating a 1% rate cut by the Fed this year. With a lack of economic data today, risk sentiment is likely to dominate, and we may see partial reversals of the previous day’s movements.
The Reserve Bank of Australia decided to maintain rates at 4.35% this morning but adopted a more hawkish stance in their outlook, as their inflation forecasts did not support rate cuts. As a result, the AUD is slightly higher across the board.