Two concerns behind the rate cut have disappeared; now awaiting the Fed Chair's remarks [From Mr. Rikio Shima's newsletter]
From the investment newsletter Real-time Practical Trades by Rikio Shima, provided by GogoJungle, here is a small portion from today’s issue.
The pound-dollar has fallen below 1.25. The low touched during the January 3 flash crash was 1.2460, but it has updated the low and dropped to 1.2440. The euro-dollar, dragged by the pound-dollar, broke below 1.1200, but is gently rebounding near the important support at 1.1180.
Basically, the market is waiting for Chairman Powell’s testimony before Congress. Last week’s U.S. employment data was solid. If that is the case, one big question arises: is the economy really in a condition that warrants a rate cut?
There were two reasons given for potential rate cuts: one is the U.S.–China trade war, and the other is that manufacturing-related indicators are slightly worsening. Regarding the U.S.–China trade war, it was postponed at the G20 summit, so this concern is currently off the table. As for the claim that employment is deteriorating, the recent employment statistics dashed those concerns.
There is no clear direction. People trying to close positions before Chairman Powell’s congressional testimony are being swept along. Aside from a large gap, there are no major gaps, so it might be best to take it easy. Positions remain as they are.
『Real-time Practical Trades by Rikio Shima』quote.
Powell’s congressional testimony is scheduled for tonight at 11:00 PM, so be cautious about positions around that time. (Editorial staff)
