Insights - On September 18, the Federal Reserve will announce its rate decision. Following signals of a potential rate cut from Powell, the market has fully priced in a 100% chance of a rate cut, with debates regarding whether it will be 25 or 50 basis points and how much the Fed will cut overall this year. Gold prices have reached new highs, increasing market attention.
Note: U.S. Eastern Time
Which major asset classes are affected by interest rate cuts?
The Fed's rate decision will significantly impact financial markets. Generally, if the dovish stance exceeds expectations, it will weaken the dollar while benefiting non-U.S. currencies, stocks, gold, and cryptocurrencies.
Gold: A larger-than-expected rate cut could boost gold prices; conversely, if the Fed cuts less than anticipated, it may pressure gold prices.
Bitcoin: If the Fed cuts rates by 50 basis points, it is likely to support Bitcoin. Conversely, Bitcoin may decline further.
Nasdaq 100: A larger-than-expected rate cut or additional dovish signals from the Fed could benefit the Nasdaq 100. Conversely, if there are no cuts or the dot plot indicates unchanged cut frequency, it could negatively affect the index.
EUR/USD: If the Fed cuts rates and signals a dovish stance (such as more cuts this year), these actions could strengthen the euro against the dollar. Conversely, if there are no cuts or hawkish signals emerge, it may weaken the euro.
Oil: A larger-than-expected rate cut could support a short-term rebound in oil prices; however, a smaller-than-expected rate cut may weigh on oil prices.
What are the top market news stories?
1. Chairman Powell spoke at the Jackson Hole conference, stating that the time for policy adjustments has arrived, leading to a 100% market expectation for a September rate cut.
2. With Powell's dovish comments, expectations for rate cuts have increased, driving gold prices above $2,500, briefly reaching a record high of $2,532.
3. The founder of Telegram was arrested by French authorities, leading to a sharp decline in related tokens, currently under investigation, while Russia warned France against politicizing the issue.
Here are the institutions' views on interest rate cuts.
1. Goldman Sachs predicts the Fed will cut rates by 25 basis points in September, November, and December.
2. JPMorgan expects the Fed to lower rates by 100 basis points by year-end.
3. Citi states that if the August unemployment rate remains at 4.3%, the Fed will likely cut rates by 50 basis points in September.
What do you think the outcome of the Fed's September meeting will be?
- (1) Cut by 25 basis points
- (2) Cut by 50 basis points
- (3) Remain unchanged
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