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Will the expected Fed rate cut in the coming months see the Dollar lose value?


Djamel Brahimi

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Guest Sam Bouman

The markets seem to already be expecting a rate cut from the fed with some even saying that they are expecting up to three rate cuts within the next cycle.

This would normally send most currencies crashing but it seems that the US dollar is once again showing its resilience and showing the markets that the king dollar reigns supreme. At the beginning of the month we saw the USD lose some of its value but that did not last for long as it has all but regained those losses since the beginning of last week. 

Whether we will see the dollar lose any value in the face of the rate cuts is difficult to judge, this is because any decision that the fed makes to cut rates whilst it will be negative for the Dollar it will also signify that the fed is worried about the global downturn and not just in the US, this in turn means that investors will look to safe havens of which the dollar is included!

I think any reactions to a dovish statement tomorrow or an unexpected cut will be initially bearish for the dollar but it will be short lived weakness.

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