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International financial news

International financial news

[The Fed announced a 25 basis point rate cut, Trump: no courage, no common sense, no vision!]  The US media reported that the Fed announced on the 18th that it will cut interest rates for the second time in the year, down 25 basis points to the range of 1.75% to 2%.  Although Trump has repeatedly asked the Fed to cut interest rates sharply, it is clear that he is not satisfied with these 25 basis points and feels that it is not enough.  He said: "Powell and the Fed failed again. No courage, no common sense, no vision! A bad communicator!"

[Federal statement observation: the decision-making level diverged, some officials advocated a 50 basis point rate cut] The dissidents appeared for the third time in the era of Powell's chairmanship, and the differences in decision-making levels further expanded. The two local Fed governors still opposed the interest rate cut.  The other claimed that the interest rate would be lowered by 50 basis points at a time.

[Fed Chairman Powell: Money market turmoil is not important to the US economy] Fed Chairman Powell has played down the impact of the currency market turmoil this week, saying that liquidity tightening has no impact on the economy, and the Fed has enough tools to solve this problem, just as this  As shown in the week.

[US crude oil inventories increased by 1.058 million barrels last week] Last week, gasoline inventories increased by 781,000 barrels, distillate stocks increased by 437,000 barrels, and Cushing crude oil inventories decreased by 647,000 barrels.  Refinery capacity utilization fell by 3.9 percentage points, and the market forecast fell by 0.5 percentage points.  Crude oil imports increased by 325,000 barrels per day, and crude oil production was flat.

[British Prime Minister Johnson reiterated that he hopes to reach a Brexit agreement] A British government spokesman said that according to the e-mail statement of the Prime Minister's Press Office, British Prime Minister Boris Johnson reiterated to European leaders that he is more willing to reach a Brexit agreement.


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News and Data

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AUD

Employment Change

01:30

AUD

Unemployment Rate

08:30

GBP

Retail Sales m/m

11:00

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Official Bank Rate

11:00

GBP

MPC Official Bank Rate Votes

12:30

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Philly Fed Manufacturing Index

12:30

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Unemployment Claims


Summary of investment bank views


Wells Fargo: The next step for the Fed will depend on more economic data




The Fed issued a policy decision on Wednesday, local time, as expected to cut interest rates by 25 basis points.  However, the content of the resolution and the "lattice map" both highlighted the huge differences in their internal opinions. The three voting committees voted against the resolution, while less than half of the 17 policy committee members thought that the demand for the year would be further cut.  After the above situation was known to the market, the US dollar index was slightly stronger.

Wells Fargo, the industry body, pointed out that although the Fed policy is expected to show that the rate cut again during the year is not the mainstream prospect, Fed Chairman Powell still stressed the additional risks brought about by the trade environment and external economic risks.  This makes the Fed's policy outlook still full of uncertainty. In fact, Powell does admit that once it is necessary, he will not hesitate to take more lenient actions, but it has not yet reached such a moment.  Based on the impact of global trade and the economic environment, the Fed will continue to cut interest rates twice in the fourth quarter and the first quarter of next year, even if the US economy is still in the growth range.

Citigroup G10 currency leader: The Fed hinted that the easing policy has ended or not, driving the dollar to rise


 


The Fed's latest dot-matrix chart shows that it will not continue to cut interest rates in 2019, which is boosting the dollar as the market is reassessing the degree of dovish among policymakers.  It can be seen that the median estimate maintains the interest rate unchanged in 2020, and will rise in 2021 and 2022. This is equivalent to the fact that the Fed has already mildly suggested that the easing policy may have ended. We will continue to continue to see more dollars.

Dutch International Bank: The Federal Reserve will further implement the easing policy, and the Fed is expected to cut interest rates by 25 basis points in December.




The Dutch International Bank believes that the Fed will further reduce interest rates, and concerns about global economic growth are increasing. The latest round of monetary policy easing by the European Central Bank is unlikely to be a catalyst for economic recovery in the euro zone, plus Iran and Saudi geopolitics.

The increase in tension, the concerns of Brexit, the strength of the US dollar, and trade frictions are obvious factors that the US economy will continue to face some headwinds. So far, the US consumer industry has performed well, but employment growth has shown signs of slowing down, net trade.  And investment spending has become a drag on economic growth, which provides a reason for the Fed to further reduce interest rates; we expect the Fed to cut interest rates by another 25 basis points in December this year and cut interest rates again in the first quarter of 2020.


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