The focus of the session was the interview with Federal Reserve Chair Powell on US TV show ‘60 minutes’. The interview was recorded on February 1 and went to air on the evening of February 5 (US time). Powell did not say anything really new, if you heard him speaking on Wednesday you basically heard what he had to say today. What was more interesting, at least a flurry of interest, was what he didn’t say. In the written article accompanying the interview the journalist wrote:

  • The most likely time for the first interest rate cut will be the middle of the year

The journo did not attribute this to Powell, and indeed such a specific timing remark didn’t appear in the transcript (the link to this is above). However, the fact that it was written in the article but not actually said by Powell caused a stir, even if only briefly. Market pricing for the June meeting is around 85% for a cut so it probably isn’t too far from what the first step will be.

Across major FX there is not a lot of net change. Most major FX against the USD traded in a subdued range. USD/JPY climbed to above 148.75 at one stage but as I post is back to being more or less unchanged on the session.

Over the weekend were vague ‘pledges’ from Chinese authorities to support equity markets. Chinese stocks fell again today. Hard. As I post the Shanghai Composite is down around 1.8%. About a quarter of individual equities are limit down for the session.

Over the weekend Trump said, again, that if elected he'd be thinking of imposing 60% tariffs on imports from China.

usdyen wrap chart 2

USD/JPY had a round trip up and back