As expected, the Federal Reserve cut interest rates by 50bp, although the scale of the reduction sparked divided opinions in the markets. The dollar initially weakened after the decision, with EUR/USD rising to 1.12 and USD/PLN falling to 3.82. It is likely that the Fed is planning another 50bp cut by the end of the year. Rate lowering in the US started later than in other developed countries, which is expected to be made up for by faster cuts. Invest.Conotoxia.com’s analysts point to a further possible fall in the dollar, with USD/PLN below 3.75 by mid-2025. In the coming week, markets will be closely monitoring key decisions and economic data that could significantly affect the quotations of the major currencies, particularly the franc. On Thursday, the Swiss National Bank will announce its interest rate decision, which could see another cut. On the same day, the final US GDP reading for the second quarter will be published. On Friday, meanwhile, the latest US PCE inflation data will be known.
Table of contents:
- Interest rate decision in Switzerland
- US gross domestic product (GDP) quarterly (Q2).
- US personal consumption expenditures (PCE) price index per year (August)
Thursday, 26.09, 9:30 CET, interest rate decision in Switzerland
At its latest meeting in June, the Swiss National Bank cut its main interest rate by 25 basis points to 1.25 percent, in line with market expectations. It continued what started as one of the first cycles of rate cuts in developed countries. The decision appears to have been driven by falling inflationary pressures and the strength of the franc. The SNB forecasts annual inflation of 1.3 percent in 2024, 1.1 percent in 2025 and 1.0 percent in 2026, under the assumption of maintaining rates at 1.25 percent. The bank also forecasts moderate GDP growth of 1 percent in 2024 and 1.5 percent in 2025.
Analysts' consensus is for another interest rate cut in Switzerland to 1 percent.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for the CHF, while a lower-than-expected interest rate could act bearishly on the CHF.
Impact: EUR/CHF, USD/CHF, CHF/PLN
Thursday, 26.09, 14:30 CET, US gross domestic product (GDP) quarterly (Q2).
According to second estimates, US real GDP grew at an annual rate of 3.0 percent in the second quarter of 2024 and 1.4 percent in the first quarter. Growth was driven by consumer spending (2.9 percent), inventory investment (7.5 percent) and fixed asset investment (4.6 percent). Exports, non-residential investment and government spending figures were revised downwards.
Analysts' consensus is for the final US GDP reading to remain at 3 percent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the USD, while a lower-than-expected reading could act bearishly on the USD.
Impact: EUR/USD, USD/PLN
Friday, 27.09, 14:30 CET, US personal consumption expenditures (PCE) price index per year (August)
PCE inflation, the equivalent of CPI growth, remained at 2.5 percent in July, the lowest since February 2021. The low inflation allowed the Federal Reserve to cut interest rates by 50 bps for the first time this cycle.
Analysts' consensus is for inflation to fall further to 2.4 percent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the USD, while a lower-than-expected reading could act bearishly on the USD.
Impact: EUR/USD, USD/PLN
Grzegorz Dróżdż, CIIA, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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