Before the Federal Reserve announces its latest interest rate decision this Thursday, Taiwan time, the market is paying close attention to the "retail sales data" to be released in the United States tomorrow night. This economic indicator, known as "horror data", may It has once again had a significant impact on market sentiment and the direction of the Federal Reserve's decision-making.
Note: US August retail sales will be announced at 20:30 tomorrow (17th).
The probability of a 2-digit rate cut is higher
UBS said it is closely tracking retail sales and industrial production data. If these data are weak, it may prompt the Federal Reserve to choose a more significant interest rate cut, which will be a 50 basis point cut instead of the 25 basis point rate cut widely expected by the market. .
Our "base case" is that the Fed will cut interest rates by a total of 100 basis points over the remainder of this year and another 100 basis points in 2025. As interest rate cuts gather pace, the dollar weakens and gold strengthens.
According to CME Fedwatch data , the current market expectation is 43% for a 1-digit rate cut (i.e., 25 basis points) and 57% for a 2-digit rate cut (i.e., 50 basis points).
In addition to the Federal Reserve's final interest rate decision, which will be announced at 2 a.m. Taiwan time this Thursday (19th), investors and analysts will also pay close attention to two key points:
- The " dot plot " in the Fed's quarterly forecast update, which will show Fed members' expectations for the direction of interest rates in the next few years;
- Federal Reserve Chairman Jerome Powell's press conference at 2:30, analyzing his remarks on future policies.
Jefferies economist Tom Simons said the Fed should focus on normalizing policy rather than providing easing measures to support the struggling economy. He said:
The Fed has done a good job communicating this position. It is predicted that even if the Fed cuts interest rates by one point, there will still be enough room for more actions in the future.
Negative correlation between Bitcoin and gold expands
Affected by factors such as market expectations that the U.S. Federal Reserve will cut interest rates next week, growing demand for safe havens, and large-scale central bank purchases of gold, gold hit a record high again last weekend; Bitcoin, on the other hand, fell below $59,000 again early this morning.
According to Cryptoquant data , the correlation between the two is already negative and continues to expand. Data in recent years shows that gold prices will rise when interest rates are cut to avoid a possible economic recession. Can Bitcoin continue to rise this time as a safe-haven asset? Until we continue to observe.
