Is the United States really in an economic situation that requires a rate cut?! [From Mr. Rikio Shima's newsletter]
From the investment email newsletter "Shima Rikio's Real-Time Practical Trading" by Shima Rikio, provided by GogoJungle, here is today’s distribution.
The pound-dollar has fallen below 1.25. The low reached during the January 3 flash crash was 1.2460, but it has updated the low to 1.2440. The euro-dollar, dragged by the pound-dollar, has fallen below 1.1200, but it has gently rebounded near the important support of 1.1180.
Basically, the market is waiting for Chairman Powell's testimony to Congress. The January U.S. jobs report was strong. If that is the case, one big question arises: is the economy really in a situation where a rate cut is warranted?
There were two reasons cited for rate cuts: one is the U.S.-China trade war, and the other is that some economic indicators, especially in the manufacturing sector, are deteriorating slightly. Regarding the U.S.-China trade war, it was postponed (delayed) at the recent G20, so there is no immediate concern.
As for the aspect of worsening employment, would that be a reason? In the latest employment data, concerns about deteriorating employment were blown away. There is no clear sense of direction. People are being swept up by those who want to close positions before Powell’s congressional testimony. Besides that, there are no major gaps, so it might be best to stay calm. Positions remain as they are.
‘Shima Rikio's Real-Time Practical Trading’ (Shima Rikio)quotation.
Because the U.S. employment statistics turned out better than expected, expectations for rate cuts appear to be diminishing. Please pay attention to Chairman Powell's congressional testimony today and tomorrow. (Editors)
