the theme of the possible rate cut from the Fed this year is a subject that is decidedly central to the reflections of the investors this week, with an increase in arrow of expectations of rate cuts.
According to the barometer of the Fed funds rate Investing.com, which is based on the evolution of future contracts, monetary now there is 98.7% chance that the Fed lowers its rates at least once before the end of the year.
The probability of seeing the Fed reduce its rates 2 times at least is also very high, at 88.7%.
The probability exceeds 50% (52.8%) to see the Fed raise its rate at least 3 times before the year 2019 ends.
Since the beginning of the week, a number of voting members of the Fed are expressed in a register largely dovish, Bullard has even addressed without detour of rate cuts in the beginning of the week.
Powell, the head of the Fed, has suggested yesterday that the Fed will take the necessary steps to support the economy in the face of the risk represented by the trade war.
It could also address other comments dovish tone on Thursday, with including Evans, who felt that the low inflation alone justified more currency flexibility.
For its part, Brainard recalled that the work of the Fed is to support growth, noting that the Federal Reserve is prepared to adjust its monetary policy in the context of this objective.
It would seem, therefore, that the Fed members gave their speeches to prepare the market for the formalization next projects of a rate cut from the Fed.
It seems unlikely that the Fed lowers its rates at its meeting of 19 June, but it could use this appointment to pre-announce this decision.
It will then remain to refine the expectations regarding the timing and the number of rate hikes to be expected, knowing that a lot of analysts agree to anticipate an increase of 0.25% in the month of September, and another in the month of December.
It should be noted that these perspectives are a factor bearish for the Dollar. On the Forex, we can estimate that this could support the EUR/USD pair, unless the ECB of its side shows up even more dovish than his american counterpart…