- Where is the Dollar Headed this Week? - August 29, 2016
- Will Aug NFPs Help or Hurt USD/JPY? - August 4, 2016
- BoE Preview – Rate Cut AND QE? - August 3, 2016
- RBA Rate Cut – Not a Done Deal - August 1, 2016
- July FOMC – Reason for Fed Optimism - July 26, 2016
- ECB – My Top 8 Takeaways - June 2, 2016
- Forex June Seasonality – Negative Dollar Bias - June 1, 2016
- RBA May Preview – Will they Cut Rates? - May 2, 2016
- Will the Bank of Japan Cut Rates Tonight? - April 27, 2016
- How Far Will the RBNZ Go? April Meeting Preview - April 26, 2016
Fed fund futures are already pricing in a greater chance that the central bank will cut rates by 75bp on December 16th than 50bp. That would bring US interests down to 0.25% and turn the US dollar into the lowest yielding currency in the developed world.
Since Japan’s interest rate is currently 0.3%, if the US takes rates below Japan’s levels we could see a downward adjustment in USD/JPY. At this point, taking interest rates to zero may only have limited impact on the financial markets because short term yields are already trading near those levels. Beyond that comes quantitative easing and in many ways, the Federal Reserve’s latest announcements about buying Fannie and Freddie debt already constitutes quantitative easing.
However there is hope as the continual decline in oil prices will help to cushion the blow of a softening economy for US consumers while the prospect of 4.5 percent mortgage rates could help to reinvigorate the housing market. In addition to the retail sales report, we also expect pending home sales, the trade balance, producer prices and the University of Michigan consumer confidence survey from the US this week.
CAD: Bank of Canada Expected to Cut Rates to 1.75%
EUR: Will it Remain Immune to Weak Data?
GBP: May Continue to Underperform the Euro
JPY: Recovery in Dow Takes Yen Crosses Off Multi Year Lows
AUD: Construction PMI Sinks to 32.0
NZD: Retail Sales on Tap Next Week