August 23, Economic Pulse – Key Events This Week

 

Key Events This Week

The Fed unexpectedly cut its key rate by 50 basis points which raised many questions.

 

• Against expectations: Most analysts had predicted a more moderate cut.
• Signals of trouble: Despite the Fed’s optimistic Fed’s optimistic statements about the state of the economy, the data pointed slowing growth and possible recession risks.
• Historical parallels: Similar sharp rate cuts in the past have been associated with crises.
• Political factors: The upcoming U.S. election could influence the Fed’s decisions to support the financial markets.
• Risks to the global economy: The Fed’s decision could cause volatility in financial markets and affect exchange rates.

 

The main reasons for this decision:

• Slowdown in credit: Problems with credit build-up may indicate deeper problems in the economy.
• Rising public debt: Rates need to be lowered to make debt servicing less burdensome.
• Political considerations: Maintaining stability in financial markets before elections may be a factor.

 

Possible consequences:

• Recession: A sharp rate cut could be a sign that the U.S. economy is already on the verge of recession.
• Market Volatility: Uncertainty about the future economic outlook could lead to volatility in financial markets.
• Changes in the global economy: The Fed’s decision could affect exchange rates and investment flows.

 

Conclusion:

The Fed’s decision to cut the Fed Funds rate is ambiguous and could have serious implications for the global economy. The future will show how effective these measures will be and whether they will lead to the desired results.

Keywords: Fed, rate cut, US economy, recession, inflation, financial markets, elections

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Weekly Central Bank Events Schedule

Monday, 23 September /////

• (USA) Business Activity Index (PMI) in the US service sector

 

Tuesday, 24 September /////

• (USA) CB US Consumer Confidence Index
• Reserve Bank of Australia (Australia) Reserve Bank of Australia interest rate decision

 

Wednesday, 25 September /////

• USA
  • New home sales
  • Crude oil inventories

 

Thursday, 26 September /////

• Swiss National Bank (Eurozone) Swiss Central Bank Interest Rate Decision
• (USA)
  • US GDP
  • Number of Initial Jobless Claims in the US
  • A Speech by Mr. Powell, Chairman of the US Federal Reserve System (Fed)

 

Friday, 27 September /////

• Germany (EUR) Germany Unemployment Rate

 

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Volume analysis for the Euro, Oil and S&P500 futures are shown in the slides below.

Daily timeframes include volume support (indicated by green band) and resistance (indicated by red band).