Kit Juckes, global chief currency strategist at Société Générale, discusses the G5 growth and interest rate forecasts and their implications for the currency market.
Sluggish growth but lower rates will weaken the dollar
The G5 growth and official interest rate forecasts show sluggish growth clearly enough, but highlight the prospect of a 150 basis point cut in Fed rates next year, and relative to elsewhere.
A 125 basis point cut in the rate gap between the Fed and the ECB should be negative for the Dollar, and there is room for the forecasts to be very wrong and the rate gap to narrow more than the market expects!
A significant Fed rate cut will also (eventually) reverse much of the political movement that brought USD/JPY to current levels.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.