As expected, the Federal Reserve cut interest rates by 25 basis points yesterday. This was accompanied by ‘less dovish’ comments from Jerome Powell, who said that this is not the beginning of an easing cycle. He ensured that the cut is a preventative measure to “insure against downside risks.” However, he didn’t completely rule out further cuts.
The dollar strengthened as a result of the Fed’s announcement and is still strong this morning. The ADP employment report also came in better than expected, showing that 156,000 private jobs were created in July.
Focus now shifts to Non-Farm Payrolls which are released tomorrow. They are expected to come in at 165,000 for July, a fall from June’s 224,000.
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