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Powell’s Reiterates Commitment to Sustain Expansion; At least two more cuts still expected in 2019

Fed Chair Powell’s speech in Zurich triggered a dollar rebound that also saw gold erase all of its nonfarm payroll gains.  His speech will be the last comments we hear from him as we enter the blackout period for the September 17-18th meeting. He avoided commenting about near-term decisions, but he did note the outlook for the global economy and US is for continued moderate growth.  Powell for the most part did not deliver any major changes with his Jackson Hole speech.  The Fed will keep the record long expansion going with future rate cuts as significant risks to the outlook will warrant further accommodation. 

Regarding the labor report, he noted it is consistent with a strong labor market and good outlook, but with manufacturing and business investment indicators now sideways to slightly down, dovish bets will not be paired.  The Fed is not forecasting a recession, but then again, they are horrible predictors of that. 

In addition to the trade war, geopolitical risks, such as Brexit and Hong Kong are wildcards that will keep easy monetary policy the mantra for the next several months. 

Fed fund futures are still pricing in about 60 basis points of rate cuts for the rest of the year.  The dollar recovered earlier losses, but will still close near the lows for the week. 

The dollar rebounded following Powell’s speech, while gold gave up most of its earlier nonfarm payroll gains.

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Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya