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How gold, oil, stocks and USD develop after the FOMC rate cuts start



REDUCTION OF FEDERAL RESERVE CYCLES AND MARKET DEVELOPMENT – SUMMARY:

  • The Federal Reserve is expected to announce its second interest rate cut this year, confirming the change of central bank towards an increasingly moderate monetary policy.
  • FOMC cut rates have historically led to mixed returns on assets such as gold, crude oil, the S & P 500 and the US dollar on Wednesday at 18.00 (GMT) to present the latest monetary policy update. Markets generally expect the FOMC to cut interest rates by 0.25% as central banks around the world relax financial conditions. The cautious measures taken by the Fed and other central banks were primarily aimed at combating signs of economic weakness and sustaining the current expansion in the face of overwhelming risks stemming mainly from the US-China Trade War and the increasing geopolitical risks Instability result.

    In this sense, the Fed meeting in July revealed the FOMC's first interest rate cut in over a decade. The move followed a dramatic change in the language and forecast of the Federal Reserve compared to that time last year. In fact, the Federal Funds Rate (FFR) estimate for 201

    9 was 3.1% according to the economic forecasts submitted by Fed members in September 2018, while the last forecast presented in June showed an FFR of 2.4%. However, the federal government's current interest rate range is 2.00-2.25%.

    DOES THE FED ENTER INTO A CYCLE OF ZINCS?

    The Federal Reserve's declared dual mandate governing central bank decisions includes price stability and full employment. While downside risks, which mainly contribute to a slowdown in global GDP growth remain unsolved, the potential for further deterioration in economic fundamentals can not be ruled out and may encourage additional interest rate cuts – regardless of what the FOMC decision does revealed by Wednesday.

    Accordingly, given the continuing recession fears triggered by the recent inversion of the US yield curve the central bank will continue to lower inflation below the US Federal Reserve's target to stimulate consumption and corporate investment. However, another Fed rate cut could suggest that the scale is different from "mid-cycle adjustment" rather than a full set of accommodative policies. Continuing our original analysis of the stock market returns when the Fed lowers key interest rates . However, the tables and graphs below show how various assets such as gold, crude oil, the S & P 500 and the US dollar have developed in the past. The Fed is entering a cycle of interest rate cuts.

    GOLD PRICE IS RECEIVED WHEN THE FED CONTINUES

      Gold price reverses during the key rate cut   As gold, oil, stocks and USD expire after FOMC cut interest rates

    CROP IS RECOVERED IF THE FED IS THE FED PRICES

      Oil price returns during key rate cut   FOMC key rate cut and oil price performance chart

    S & P 500 INDEX RECEIVES IF ECB rate cut

      Stock price returns when rate cut is lowered [19659025] FOMC rate cut and S & P 500 index performance chart

    DXY US DOLLAR INDEX RECEIVES IF THE FED CUT THE RATE

      US dollar price return during the Fed's interest rate cutdown   FOMC Interest Rate Cut and US Dollar Index Performance Chart

    – Posted by Rich Dvorak Junior Analyst for DailyFX.com

    Connect with @RichDvorakFX on Twitter, around market get real-time information


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