FED CHAIRMAN POWELL PREPARES MARKETS FOR MONETARY EASING & FURTHER US$ DEBASEMENT

As fully expected Fed Chairman Jerome Powell did not disappoint in signalling FOMC Rate cuts are ahead. Though the dollar did not appear to react, that is because it had weakened going into the much anticipated FOMC meeting and had already prepared by finding support at the 40 WMA.  The dollar (DXY) looks technically week with the next support level at the 80 WMA (and lower).

The Powell's announcement and ECB's Mario Draghi's comments the previous day from Sinatra, Portugal exploded Gold higher, breaking major overhead resistance going back to 2013.

 

KEY FOMC TAKEAWAYS

  • Fed keeps rates unchanged but removes reference to being "patient" on rates while adding that "uncertainties" around its outlook have increased, even if did not warn of "material downside risks" to outlook.
  • The FOMC says it will "act as appropriate to sustain the expansion" and "closely monitor" incoming information, language that echoes Powell's recent speech but is new to the statement.

The key sentence was the following:

... uncertainties about this outlook have increased. In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective

And yet it wasn't as dovish as some had expected, with the Fed avoiding to mention "material downside risk to the outlook."

The Dot Plot adjusted dramatically lower...

  • For 2019, 8 Fed officials see lower rates with 7 of them seeing 2 cuts this year (and 1 seeing one cut). At the same time 8 see unchanged rates and 1 sees a rate hike.

 

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SOURCE:  06-19-19 -   - "Fed Hints At July Cut As Expected, Drops "Patient" Language, Says "Outlook Uncertainty" Has Increased"

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