Japanese Yen increase and new steps from Trump open the door to rate cut
As per the latest report, immediately after the US President Donald Trump’s threat to issue new tariffs on Mexico, Japanese Yen has jumped over the US dollar. Besides, the Mexican peso has also gone down. Some experts have stated that such steps from Trump can create a recession in the global economy. For more detail, you can take help of online forex brokers.
Moreover, the effect of downward trade tension between Beijing and Washington is now showing up in economic data. Chinese manufacturing activity has disappointed various investors. Donald Trump’s newest decision stimulated a rush to safe-haven assets, for example, government bonds, and the Yen. As per the report, the U.S. dollar goes down to 0.8percent against the Yen JPY= EBS to 108.78. Besides, the greenback slipped against the Euro. As per Top Online Forex Brokers gave the information, the dollar also has slipped against the euro.
China also had stepped up its trade war. Different reports further informed that China could put an export ban on rare earth materials. Now the uncertainty related to trade wars has spilled into the economy as Chinese Manufacturing PMI are now falling into contractionary territory.
Following this incident, the gold price has gone up again. Now the price at the highest level in just two weeks. Well, the major resistance of the 100DMA at $1296 has kept constant for now. However, all the eyes will be on to boost higher and break, which will be more than May peak, which $1303 to the extent the recent movement.
It has opened the way for a rate cut.
Following the steps taken by the US, the current strategy of the Federal Reserve will focus on maintaining the interest rates and wait for any further changes. Some think that the US economy is still in a good place. Well, there is a disconnect between the bond market and the current stance of the Federal Reserve. The ten years long US yield curve is now inverted significantly after the crisis. As per the online forex brokers, the Fed Fund Feature is now pricing in more than 60bps.
On the other hand, Den Clarida, the Vice Chair Man of Fed has stated that the Federal Reserve can mull an interest rate cut. The organization is attuned to potential economic risks. Such risk may call for accommodative policy. As rate cut bet begins to rise, upside risks to gold prices can persist. You can get more information by contacting Top Online Forex Brokers.
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