Powell signals potential to ease policy if needed…
The greenback is a shade weaker and stocks a lot stronger following yesterday’s speech from Fed chairman, Jerome Powell.
The chief of the largest global central bank indicated that the Fed were open to the prospect of interest rate cuts should they be warranted. The chairman confirmed the Fed are “closely monitoring” the impacts of US trade tensions and stated that they would react if the economy is threatened. Jay Powell went on to say that “As always, we will act as appropriate to sustain the expansion.” Reaction across markets saw FX dealers and traders sell the US dollar while stock markets cheered the prospect of cheaper money. The pound managed to pop its head above the $1.27 level before closing the New York session just below.
Today’s trading session sees an important release from the UK’s perspective. This follows on from a soft May print in the construction sector yesterday, similar to Monday’s manufacturing report, a number sub 50 which indicates contraction. If this morning’s services PMI goes the same way then GBP may have a problem. Additional releases of importance today: US private payrolls data at 13.15 followed by non-manufacturing ISM, eurozone retail sales and regional service PMIs. Overall, a busy mid-week for markets which should see volatility across the board.
Written by Viv Savani. 8:51am, June 5th 2019
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