In an interview with the New York Times on Monday, John C. Williams, President of the Federal Reserve(Fed) Bank of New York, stated that he believes interest rates will begin to fall next year.
Additional thoughts
“Inflation was falling as expected, and he expected unemployment to rise slightly as the economy cooled.”
“Did not rule out the possibility of lowering interest rates in early 2024, depending on economic data.”
“In my own projection, in my own forecast, I expect the unemployment rate to be higher than 4% next year.”
Market’s reaction on Fed statement
Williams’ remarks appear to be having little to no effect on the Greenback at the time. At 102.30, the US Dollar Index is flirting with intraday highs, up 0.30% for the day.
The Euro (EUR) begins the week with an offered bias against the US Dollar (USD), forcing EURUSD to return the sub-1.1000 level after the old continent’s opening bell on Monday.
On the other hand, the Greenback regains traction following two consecutive daily pullbacks. Regaining the territory beyond 102.00 at the same time, as investors digest Friday’s release of Nonfarm Payrolls numbers (+187K).
The US Dollar (USD) resumes its strong surge that began in mid-July after being slowed by a mixed US jobs report on Friday. Market investors interpreted. The US jobs report as a warning that the Federal Reserve (Fed) should take a break, with a rate hike scheduled for the fourth quarter of 2023. As the dust settles, traders are once again purchasing the US dollar. As the risk of sticky or higher US inflation remains.
