The Fed's mouth is a lie.
Market changes are like a master of changing faces, catching people off guard and leaving them confused. Just like you are cautious and full of questions, you just figured out why the Fed wants to cut interest rates by 50 basis points, and in the blink of an eye you have to wonder why they can't do the same. The Fed's words are really harder to predict than ghosts.
Overnight, the Fed's tone completely changed, with all the talk being "caution," "balance," and "data." New York Fed boss Williams said that the Fed would cut rates twice more this year, 25 basis points each time, which was a good plan. Atlanta's Bostic said that rate cuts require weighing various risks, like playing with a scale. Boston's Collins was even funnier, saying that rate cuts must be done slowly, based on data, and to keep the U.S. economy going strong.
Why did it change so quickly? I think there are several reasons:
First, the non-farm data was amazing. In September, 254,000 new jobs were added, which was much higher than the expected 150,000. Who could have thought of this?
Second, the election is coming soon, and the two candidates are competing fiercely. Whatever the Fed does may be said to be "helping to canvass votes", so they now just want to "stabilize" and not cause trouble.
Third, the situation between Palestine and Israel has started again. If the fire spreads, oil prices, commodity prices, and inflation may all rise. How can the Fed not panic?
Now the market is thinking that the Fed may cut interest rates once in November and December this year. The US dollar index took a "V" shape in early October, like a roller coaster. This is not only the US dollar's own fault, but also related to the weak performance of its "little partners" such as the euro and the yen.
The central bank of the euro has been thinking about cutting interest rates, and the governor of the Bank of France has said that monetary policy will be relaxed. The trend of the euro is closely tied to the interest rate differential between Europe and the United States. Once the interest rate changes, the exchange rate will move accordingly.
As for the yen, the new Prime Minister Shigeru Ishiba gave everyone a "reassurance pill" as soon as he took office, saying that he would continue the monetary policy, which made the yen weaken again. Maeda, the former head of the Bank of Japan, also predicted that the next interest rate hike by the BOJ would have to wait until January next year, which is later than the previous end of the year.
As for the RMB, although a bit weak, it is still relatively strong among a bunch of currencies. After all, RMB assets are attractive.
What will happen in the future? I think that as the November election approaches, the market will definitely focus on the election. Trump's approval rating has caught up again, and he is even ahead in several swing states. If the "Trump trade" becomes popular, the US dollar may become stronger again.#WeAreAllSatoshi #SCRfarmingyet? #U.S.UnemploymentNewLow #BNBChainMemecoins #Write2Earn!