Fed Rate Cut Looking Likely
The USD fell against the Euro for the fifth day on speculation of a Federal Reserve interest rate cut later today.
It is expected that the Fed will cut the interest rate by a full percentage point to steady the shaky economy.
The US economy hasn’t been helped with the news of Bear Stearns being bought by JP Morgan at a bargain price after it experienced liquidity problems last week leading to a near meltdown of the business.
China expressed concerns at the ever-weakening dollar, China’s premier Wen Jiabao said “I’m concerned with when the U.S. dollar will reach a bottom, and what monetary policies the U.S. will take.” - Bloomberg
A Look At The Chart
Looking at the 1-hour chart for EURUSD, we can see that the pair have continued to move in a positive trend. The price is closely moving up in line with55-day moving average. The pink support line show our support line. With the Fed rate announcement later, we would look for a break below support for a short position. There’s no trade until the rate cut is announced however.
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Comments
I was really surprised to only see a 0.75 percent rate cut, I was looking for 1 percent.
The US are definitely going to face increased inflation over the coming year, along with Australia as you mention.
I’d assume Australia’s commodities and the China’s great demand for precious metals will keep Australia from slowing too much. At least not to the degree the US is facing.
In the UK the inflation rate is expected to drop back to around 2 percent, but it will probably take a couple of years to stabilise.
The US Fed cut the US interest rates by 0.75 basis points today; unfortunately here in Australia our interest rates have risen almost every month as we are experiencing stagflation