Two Fed rate cuts on the cards, but no shorting the USD – JP Morgan

In the view of the analysts at JP Morgan, the US Federal Reserve (Fed) is likely to reduce the interest rates twice this year, but do not recommend going short on the US dollar.

Key Quotes:

“Looking for 2 Fed rate cuts in 2019, citing harmful impacts on business confidence caused by US trade war induced trade uncertainty.

Lower rates, so short the buck? No.

The corollary in the FX-space to a more challenged global growth environment should be a broadly stronger USD

Conclusion would not be fundamentally altered if the Fed did decide to take out insurance and cut rates since it would be doing so in a weakening, i.e. USD supportive, global environment.”