Premarket: Fed rate cut bets lift stocks, US dollar steadies

There’s now more than a 40% chance that the Fed will slash its target rate by 50 basis points. | Source CME

There’s now more than a 40% chance that the Fed will slash its target rate by 50 basis points. | Source CME

New York Fed President John Williams on Thursday said policy makers should take preventative measures at the first signs of economic slowdowns.

"This was an academic speech on 20 years of research", a spokesperson said of the remarks Williams made in New York."It was not about potential policy actions at the upcoming FOMC meeting".

However, the New York Fed clarified later that Williams' speech were not indicative of the central bank's future moves.

Asian stocks are flashing green after gains on Wall Street. "Should these probabilities change, as a result of the Fed potentially indicating a one-and-done attitude this month, then the dollar could rapidly appreciate as the futures market re-positions", said Tadbir.

Investors are now pricing in a 43.1% chance of a 50-basis point cut in USA rates later this month, according to CME Group's FedWatch tool, easing off the 60.2% probability hit on Thursday. Furthermore, data showed that United Kingdom retail sales unexpectedly grew 1.00% in June, stoking hopes the economy would avert a downturn in the second quarter. As recently as Tuesday, earnings were expected to show a decline for the quarter.

The underlying gauge rose 0.4% Thursday.Japan's Topix index added 0.5%.South Korea's Kospi advanced 0.7%.Australia's S&P/ASX 200 Index advanced 0.1%.

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MSCI's emerging market currency index .MIEM00000CUS has risen 0.35% so far this week to a four-month high of 1,657.07, coming within sight of this year's double peak around 1,658, hit in late January and March. Additionally, investors will be monitoring another escalation of tensions in the Middle East, after President Trump said a U.S. Navy ship destroyed an Iranian drone in a "defensive action" in the Strait of Hormuz.

Despite Friday's advance, MSCI's index was poised to snap a six-week streak of gains.

Heavyweight financials were on track for their best day in more than two weeks, with the Big Four banks gaining between 1% and 2.2%.

In commodities, US crude oil futures reversed a large part of the previous day's deep losses, briefly rising 1.45 per cent to $56.10 per barrel before easing back to $55.81, up 0.9 per cent.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. This article is strictly for informational purposes only.

"It is regrettable that the Japanese side repeatedly makes claims that are different from truth", he said. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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