Chairman Powell is not the only one under pressure – FOMC Tomorrow
The US Dollar is under pressure due to fading interest rate support. Geopolitical risks rising.
Markets expect the federal reserve to continue, or at a minimum, be in a cut cycle. Tomorrow’s Interest Rate decision is expected to be a no cut event for this meeting (according to the CME Fed watch tool).\
FOMC
The language of the meeting and the presser to follow is EXPECTED to tell the tale of continued, future reductions…if the language doesn’t echo expectations? Watch out.
Currency – Dollar, Euro, Yen
By cutting rates, models tie currency value to interest-rate differentials pointing to a weaker U.S. Dollar versus the Euro and Yen.
Trump threats and investigations into Chairman Powell in the open, (rather than other Presidents quietly going after fed chairs in the past) have a yet to be quantified, confidence undermining the fed’s independence. This also tends to be negative for the U.S. Dollar.
U.S. Naval assets in the middle east mobilizing, leads to additional speculation, increasing investor caution as geopolitical risks raise the aura if an Iran strike. Domestic political tension and unrest do very little to calm the dollar bears.
From a technical perspective, the dollar has broken key support levels and testing support in the 96 area.
The On again off again tariff edicts create less stability in the safe haven dollar asset and in some circles, it has been reported the US Government may” enjoy” a weaker dollar to stimulate exports and assist the strengthening of the yen. Japan is an important geopolitical partner in their area of the globe. |
