HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
Exness information and reviews
Exness
86%

Rate cut bets boosted by surprise dip in US retail sales


16 February 2024

Raffi Boyadjian   Written by Raffi Boyadjian

After a string of upbeat data on the US economy, investors almost breathed a sigh of relief on Thursday when the latest retail sales numbers disappointed, calming nerves about an overheating economy. Rate cut expectations have suffered several setbacks since January amid a pushback from Fed officials and the labour market and inflation not cooling fast enough.

The continuous resilience of the American economy has prompted a sharp rethink on how aggressively the Fed will slash rates this year, with investors pricing out almost three rate cuts. But perhaps the most surprising aspect in all this has been how well markets have adjusted to the first rate cut arriving no earlier than June.

A stronger-than-expected rise in January retail sales had the potential to cast doubt on even a June cut, hence the positive reaction in stock markets to the 0.8% month-on-month slump in retail spending.

The data miss comes just hours after GDP estimates in Japan and the United Kingdom showed that the two G7 economies entered a technical recession in Q4. However, even if there are no upward revisions to the GDP data, the downturns appear to be shallow, so whilst they raise some red flags for central banks, they’re not terrible enough to spark panic.

Similarly in the US, the poor retail sales readings simply underscored that a Fed rate cut is coming at some point in 2024. Investors will next be watching the latest producer price index due later today for more clues on Fed policy.

Equity markets extend gains despite economic woes

Treasury yields slipped in the wake of the retail sales report, weighing on the US dollar. But the moves were modest as Atlanta Fed President Raphael Bostic appeared unfazed by the weaker data, maintaining that it was too early to declare victory on inflation.

However, there was a stronger response in equity markets as shares on Wall Street extended their rebound from the selloff earlier in the week. The S&P 500 gained 0.6% to close at a new all-time high, but the Nasdaq lagged as tech stocks underperformed.

Nevertheless, European and Asian markets were buoyed on Friday on fresh hopes that the European Central Bank will soon cut rates while the Bank of Japan might delay a rate hike.

The Nikkei 225 index in Tokyo edged ever closer to setting a new all time high and shares in Hong Kong also jumped on local reports that there was a surge in the number of people travelling in China during the Lunar New Year holiday, pointing to an improvement in consumer sentiment.

Yen and pound slide, but euro fights off rate cut speculation

In the currency market, the Japanese yen was on the backfoot again, weakening past 150 per dollar. The yen found temporary support after yesterday’s GDP release from the latest round of intervention warnings by Japanese officials. But it likely came under pressure from comments today from BoJ Governor Ueda, as he repeated that policy would remain accommodative even after ending negative interest rates.

The pound was also down against the US dollar, failing to receive much of a lift from much stronger-than-expected retail sales figures out of the UK for January. This probably suggests that investors want to see more evidence that the economy turned a corner at the start of the year and that the recession will be a short one.

The euro, meanwhile, was only marginally lower against the greenback despite some dovish rhetoric from ECB policymakers today. Governing Council member Edward Scicluna left the door open to a rate cut before June, warning that waiting too long could choke the economy, while France’s Villeroy also upped the pressure on his hawkish counterparts by arguing against a long delay.

Even rumours that the ECB might adjust its policy statement in March to set a clear timeline for a rate cut failed to knock the euro, which last stood at $1.0764.

By XM.com

#source


RELATED

Calm before the storm in markets ahead of pivotal US data

Dollar on the back foot, equities remain wobbly; Court battles in focus after Friday’s tariffs ruling; Investors prepare for critical US data; all eyes on Friday’s jobs report; Uncertainty boosts gold and silver.

1 Sep 2025

Dollar extends slide as Bessent talks double rate cut

Dollar slips on increasing Fed rate cut bets. Treasury Sec. Bessent favors a 50bps reduction. Yen rallies on concerns about BoJ’s inflation metric. S&P 500, Nasdaq and Bitcoin climb to new record highs.

14 Aug 2025

Dollar slips as CPI data increase September Fed cut bets

US headline CPI holds steady, but core CPI accelerates; Still, the miss in the headline rate increases September cut bets; Gold slightly up, but traders remain cautious ahead of Trump-Putin talks

13 Aug 2025

Markets on edge, await US inflation figures

Muted risk appetite ahead of critical US inflation report; Strong CPI report could derail Fed rate cut expectations, boost the dollar; Gold and oil hold steady as Trump-Putin meeting nears; Aussie ignores RBA cut.

12 Aug 2025

Tariff and Fed developments weigh on dollar’s recovery

Muted risk appetite; equity indices edge higher, bitcoin struggles; August 12 deadline for US-China truce in the spotlight; Gold flirts with $3,400 as US prepares to tariff gold bar imports.

8 Aug 2025

Dollar suffers from Trump’s tariff announcements

Tariffs back in the spotlight; China could be next; Equities shrug off tariff headlines but dollar weakens; Gold rises despite progress made in the US-Russia talks; BoE to cut rates; pound’s performance hinges on degree of dovishness.

7 Aug 2025

Dollar seeks direction as Trump’s TV appearance could hurt risk appetite

Following a disastrous Friday for dollar assets, both the US dollar and US equity indices are showing tentative signs of life.

5 Aug 2025

US jobs data may challenge the dollar’s recent strength

Despite the eventful calendar so far this week – with the FOMC meeting and the various tech stock earnings standing out – market volatility had remained low until yesterday.

1 Aug 2025

Dollar rally pauses as Fed signals patience once again

Both the US dollar and US equity indices are trying to find their footing after the critical FOMC meeting.

31 Jul 2025

Dollar strength persists ahead of key events

Both the dollar and US equities start the week on a strong note; Euro suffers as European leaders challenge the US-EU trade deal; Gold retreat stalls; oil fails to materially benefit from Trump's Russia comments.

29 Jul 2025

Dollar on the defensive, seeks support

ECB pauses, raises the bar for September rate cut; Trump’s Fed visit proves uneventful, despite rate cut demand; Dollar losses mount this week, even the yen outperforms the greenback; Cryptos are on the back foot today; altcoins maintain sizeable gains.

25 Jul 2025

EU and US close to a trade deal ahead of ECB decision

After Japan, the US is nearing a trade accord with the EU. S&P Global PMIs in focus ahead of next week’s FOMC decision. ECB to stand pat, Lagarde’s signals to be key for the euro. S&P 500 hits a new record high, but earnings results come in mixed.

24 Jul 2025

Dollar strength undermined by Trump's Fed criticism

Trump firmly holds the keys to market volatility; A July rate cut is likely written off unless data turns negative; US Treasury yields have taken notice of Trump’s criticism of Powell; Pound benefits from euro’s troubles despite mixed UK data.

17 Jul 2025

Dollar battles to maintain recent gains

With the clock running down to the August 1 deadline when the updated tariff levels will probably come into force, US President Trump is now using tariffs as leverage to end the Ukraine-Russia conflict.

15 Jul 2025

US tariff letters boost dollar, dent risk appetite

Trump letters and August 1 deadline in focus; Dollar strengthens as both China and the EU avoid tariff letters; Equities are wobbly, while gold confirms lingering demand; Aussie gains as RBA surprises by keeping rates unchanged.

8 Jul 2025

Risk-on sentiment fades as tariffs return to the spotlight

Dollar surrenders gains posted after robust labour market report; Trump celebrates US budget bill approval; scheduled to sign it today.

4 Jul 2025

Nonfarm payrolls take center stage

Slide in US private payrolls raise concerns about NFP miss. US strikes trade deal with Vietnam ahead of July 9 deadline. Pound feels the heat of fiscal shenanigans. S&P 500 hits fresh record high ahead of jobs report.

3 Jul 2025

Dollar steadies as risk appetite eases on data and key deadlines

Dollar tumbles 14% against the euro in the first half of the year; Spotlight stays on US budget bill and trade talks; US data deluge today, an appetizer for Thursday’s jobs report; Oil hovers around $66, gold rally gains momentum.

1 Jul 2025

Trade optimism boosts Fed rate cut bets

Dollar slides as the US gets closer to trade deals. Trump's obsession with lower interest rates also weighs. S&P 500 and Nasdaq hit new record highs. Gold in corrective mode due to safe-haven outflows.

30 Jun 2025

Dollar stabilizes amidst mixed risk sentiment

Israel-Iran truce holds; investors focus on the US economy; Powell shuts down July rate cut expectations; US equity rally pauses as dollar tries to recover; Oil hovers around $65, gold bounces higher.

25 Jun 2025


Editors' Picks

How to Choose the Best Forex Advisor 2025

Key Factors to Consider When Choosing a Forex Advisor. Risk Management. Fees and Costs. Compatibility with Your Trading Style.

Automating Success: The Benefits and Risks of Using Forex Expert Advisors

This article explores the benefits and risks associated with using Forex Expert Advisors, providing insights into how traders can maximize their potential while mitigating potential downsides.

Best Forex Brokers 2025

By prioritizing factors such as overall rating, regulatory compliance, trading conditions and platform reliability traders can make an informed decision that aligns with their trading needs and aspirations, setting the stage for a potentially prosperous trading journey.

The Top Forex Expert Advisors 2024: Performance, Strategy, and Reliability Review

An annual roundup reviewing the most successful Forex Expert Advisors (EAs) based on their performance, strategies employed, reliability, and user feedback. This piece would provide insights into which EAs have been market leaders and why.

The Evolution of Forex Expert Advisors: Navigating the Path of Technological Revolution

The concept of automated trading has been around for decades, but the accessibility and sophistication of Forex EAs have seen significant advancements in the past few years. Initially, automated trading systems were rudimentary, focusing on simple indicators like moving averages.

Best Forex EAs – Forex Expert Advisors Rating

Expert Advisors (EAs) Rating features high-quality Free and paid Forex EA most popular on the market today.

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%
Riverquode information and reviews
Riverquode
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.