Insights From Fed’s Chair Powell’s Press Conference

Powell told reporters in a news conference following the FOMC rate decision that the central bank ‘s rate cut was a “mid-cycle adjustment” hinting that further rate cuts later this year are not a sure thing. However Powell did suggest this rate move was not necessarily a one-off.

With the US economy still on a strong path, there may not be another rate cut for the rest of this year. If that is the case, the US$ may remain strong for the rest of the year as other currencies are relatively weaker against the US$. Euro is weighed down by its poor economic conditions with further quantitative easing around the corner. Sterling is hampered by worries of a Brexit without any divorce deal. The election of Boris Johnson has increased worries to a large extend. There are concerns that RBA and RBNZ might cut rates again later this year.

The strategy – BUY USD SELL EUR/GBP/AUD, may be a good one at least till the end of the year.

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