Dollar reign over as Fed eyes rate cut?

Dollar reign over as Fed eyes rate cut?

By Erik Norland, Senior Economist, CME Group

Will a rate cut boost equities, defer any recession?

  • Are Fed rate cuts during an economic expansion unprecedented?
  • Fed cut rates in 1987 and 1998 when the economy was still growing
  • The rate cuts came amid concern over distress in financial markets
  • The cuts boosted equities, but recession followed three years later
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US dollar’s eight-year bull run in jeopardy?

  • A no-deal Brexit could weaken an already depressed British pound
  • Expanding trade, budget deficits and Fed rate cut could stymie dollar’s bull run
  • If dollar weakens, Swiss franc, yen and euro could be reluctant beneficiaries
  • Fed looks set to cut rates on July 31 after nine straight hikes since 2015
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