It’s quite paradoxical: the dollar is continuing to rise, while the Federal debt has broken the $35,000 billion barrier over the weekend and stands at $35,004 billion on Monday.
The greenback is up +0.3% against the euro, with the ‘$-Index +0.25% at 104.55, in the absence of any ‘stats’ or statements from central bankers (the FED is obliged to remain ‘silent’ on the eve of the FOMC meeting).
In reality, it’s the Euro that’s a little weaker: it’s down against all currencies (to $1.0825/$), by -0.3% against the Pound, and by just 0.05% against the Swiss Franc.
The next 48 hours will be marked by the Federal Reserve’s monetary policy meeting on Tuesday and Wednesday, which is taking place in a particular context: the Federal debt passed the $35.000Bn over the weekend and stood at $35.004Bn on Monday.
No rate change is expected, but professionals are hoping that Chairman Jerome Powell will open the door to a possible rate cut in September… which would make the cost of debt more bearable (the USA will have to pay out $1.300bn/year at the current rate).
‘The event may not move the markets that much’, says Jim Reid, market analyst at Deutsche Bank.
‘We’ll probably have to wait for the Jackson Hole symposium (scheduled for August 22-24) for Powell to give a clearer signal’, he concludes.
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