It’s ‘quite possible’ the Fed is divided amid Trump's attacks: Economist

Andrew Cummings
August 21, 2019

The Japanese currency fell for a third straight session versus the greenback, while the Swiss unit slid to a two-week low against the dollar.

"The major event is definitely Powell on Friday and we will see how he talks about the markets and what the expectations are for the September meeting", said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in NY.

In an op-ed in the Financial Times, Minneapolis Fed President Neel Kashkari argued that a rate cut is necessary next month, and that the central bank needs to use its forward guidance "to provide even more of a boost to the economy than a rate cut alone can deliver". Visit for more information on this news. And Michelle Girard, chief US economist at NatWest Markets, says the Fed itself may be split over the path to take on interest rates.

Against the greenback, the euro was broadly flat at US$1.1094 in early London trading after falling 1% last week, its biggest weekly drop since early July.

Against the yen, the dollar was little changed at ¥106.37, near a one-week high of ¥106.98.

Against the Swiss franc, the dollar climbed 0.3% to 0.9816 franc.

"Powell's speech will set the stage for, at the minimum, a 25 basis-points-rate cut at the September meeting, stressing that quantitative tightening is over", said Elsa Lignos, global head of FX strategy at RBC Capital Markets. The Fed said in July that further rate decreases may not be needed following its first cut in over a decade, but investors will be looking to see if Powell gives a different view in light of recent market activity. "The Fed has been extraordinarily quiet in the past couple of weeks after the FOMC meeting and markets are awaiting more details from Fed chair Powell when he speaks at the annual Jackson Hole conference on Friday (we are also probably going to hear from some of the other FOMC members as well, but nothing is scheduled as of now)". It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

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