The U.S. dollar has struggled for friends after the Federal Reserve started its rate-cutting cycle with a hefty 50 basis-point reduction earlier this month.   Data on U.S. consumers showed confidence unexpectedly fell in September, raising concerns about further growth in the largest economy in the world, especially as the labor market shows signs of contracting. Markets are now pricing in a 59.5% chance of a 50-basis-point rate cut at the Fed’s next policy meeting, up from just 37% a week ago, according to the CME FedWatch tool. (source investsing.com) Euro close to 13-month high In Europe, EUR/USD traded 0.1% higher to 1.1188, hovering near a 13-month high hit last month with the euro benefiting from the dollar weakness despite data pointing to economic weakness in the eurozone. “There is very little on the European calendar today, so EUR/USD range trading looks likely. But the fact that EUR/USD is holding above 1.1100 is encouraging for modest EUR/USD bulls like ourselves,”  GBP/USD traded 0.1% lower to 1.3394, falling back from levels not seen since March 2022. Sterling has received support as the

The Federal Reserve enacted its first interest rate cut in four years, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market.   With both the jobs picture and inflation softening, the central bank’s Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, affirming market expectations that had recently shifted from an outlook for a cut half that size.   Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.   The decision lowers the federal funds rate to a range between 4.75%-5%. While the rate sets short-term borrowing costs for banks, it spills over into multiple consumer products such as mortgages, auto loans and credit cards. . In addition to this reduction, the committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year, close to market pricing. The matrix of

US regulators unveiled plans to propose new capital requirements half as burdensome as their original plan. But big bank executives delivered mostly tempered and cautionary comments around the uncertainty of earnings going forward at a New York conference hosted by Barclays on Last week. JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), and Goldman Sachs (GS) stocks all fell last week, although selling pressure eased later in the day. (Year to date, those big bank stocks have rallied more than 12% Bank of America In recent weeks, the bank has also been grappling with one of its largest investors, financial giant Berkshire Hathaway (BRK-A, BRK-B) selling roughly 170 million of the bank’s shares since mid-July. “I don’t know what exactly Berkshire CEO Warren Buffett is doing, because frankly, we can’t ask him,” said Moynihan. “But he’s been a great investor for our company and stabilized our company when we needed it at the time.” JPMorgan’s stock fell as much as 6.8%, its biggest intraday drop since June 2020. Pinto’s comments follow those echoed by CEO Jamie Dimon and CFO

Investors should “go for gold” as the precious metal’s stellar run isn’t over, Goldman Sachs analysts said in a research note. The precious metal is off its all-time high touched last month but still up nearly 22% year to date, making it the world’s second-best-performing asset behind crypto. “Our preferred near-term long term is gold. It remains our preferred hedge against political and financial risks, with added support from imminent Fed rate cuts and ongoing EM central bank buying,” wrote Goldman Sachs analysts on Sunday. The firm maintains a 2025 target of $2,700 per ounce and issued a “long gold” recommendation. Purchases by central banks, which hit a record in the first quarter of 2024, have been one of the biggest drivers of the precious metal’s rise this year. BofA analysts estimate gold has now surpassed the euro to become the world’s largest reserve asset, second only to the US dollar. Geopolitical risks such the Israel-Hamas war and Russia-Ukraine conflict, as well as signals from the Federal Reserve of a September rate cut amid signs of a slowing labor market,

The 4 forces that will challenge the dominance of the dollar, according to economic researchers. While the dollar still dominates central bank reserves and world trade, the currency accounted for 59% of all global reserves at the start of 2024, down from 71% of reserve in 1999, according to estimates from the International Monetary Fund. That decline has sparked some fear among investors that the dollar could soon be ousted from its top-dog position in financial markets. While most experts say that likely isn’t happening anytime soon, the think tank said the dollar’s dominant status faces key challenges, pointing to four factors in particular. 1. US sanctions The US began implementing sanctions on Russia and its allies That’s sparked a de-dollarization drive in Russia and other BRICS nations, which have suggested they’re looking to shift away from the dollar as a reaction to Western trade restrictions.   2. US debt The US’s rising debt load could make currency holders more wary of the dollar, especially if there are concerns that the US may not be able to pay back its

Modi’s government has looked to remain neutral throughout the ongoing war between Russia and Ukraine, but has been criticized for maintaining tight trade and diplomatic ties with Moscow. India has refused to condemn the war and has continued to buy discounted Russian oil, despite Western efforts to boycott such energy purchases, whose revenues fund the conflict. Now, India appears to be seeking closer relations with Ukraine through Modi’s visit to Kyiv last week, which comes at the behest of Ukrainian President Volodymyr Zelenskyy. Modi’s trip will be the first by an Indian head of state to Ukraine since diplomatic relations were established over 30 years ago, when the European country achieved independence in 1991. ‘Landmark’ visit Modi and Zelenskyy do not know each other well and only met twice in recent months, on the sidelines of this and last year’s G7 summits in Italy and Japan, an Indian official noted when announcing the trip Monday. He described Modi’s upcoming visit as a “landmark and historic.” “Bilateral relations” between Ukraine and India are certainly at an earlier stage of development than

Japan’s second-quarter gross domestic product beat analysts’ expectations on Thursday, both on a quarter-on-quarter as well as an annualized basis. GDP rose 0.8% quarter on quarter compared to Reuters poll estimates of a 0.5% rise. This was also a reversal from the revised 0.6% fall seen in the first quarter. It expanded 3.1% on an annualized basis, also beating estimates of a 2.1% growth. On a year-on-year basis, however, the country’s GDP fell for a second straight quarter, down 0.8% after having declined 0.9% in the first quarter. Following the GDP data release, the benchmark Nikkei 225 rose 0.16%, while the broad-based Topix climbed 0.44%. The Japanese yen strengthened marginally against the U.S. dollar, trading at 147.18. Speaking to CNBC’s “Squawk Box Asia,” Jun Saito, senior research fellow at the Japan Center for Economic Research, described the GDP result as “very positive,” and will encourage the Bank of Japan to continue raising interest rates. However, Saito said that the Japanese economy will only grow “modestly” for the whole of 2024, due to the contraction seen in the first quarter of

Warren Buffett’s Berkshire Hathaway now owns more short-term Treasurys than the Federal Reserve.The company held $234.6 billion in short-term US Treasury Bills at the end of the second quarter, according to its latest earnings release. That’s up 81% from the roughly $130 billion it owned at the end of 2023. It also eclipses the Federal Reserve’s T-bill holdings, which stood at $195.3 billion as of last week.Buffett’s preference for Treasurys is reflective of him being unable to find worthy investments that exceed the more-than-5% annualized risk-free offered by government debt. It has some worried that the billionaire investor has soured on the US stock market. He has historically raised cash when he sees few attractive opportunities to invest due to elevated valuations. For context, the 1-month T-Bill yields 5.33%, the 3-month T-Bill at 5.22%, and the 6-month T-Bill at 4.95%.Those interest rates should generate risk-free gains of about $12 billion annually for Berkshire Hathaway’s massive T-Bill holdings, or quarterly gains of about $3 billion. At Berkshire Hathaway’s annual shareholder meeting in May, Buffett called T-Bills “the safest investment there is.”Treasury

The Federal Reserve’s latest monetary policy decision will be announced on Wednesday. Markets largely expect the Fed to hold rates steady at its July meeting before eventually cutting in September as the case for easing policy mounts. Inflation has shown signs of slowing in recent months. In June, the core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 2.6% over the prior year, its lowest annual increase in more than three years. Separate data for the month showed a significant decrease in another inflation metric, the Consumer Price Index (CPI). Meanwhile, the labor market has shown signs of cooling. The ratio of job openings to unemployed workers is back at pre-pandemic levels, and last month, the unemployment rate hit its highest level since November 2021. “While food and energy prices have been well-behaved and core goods have been a steady source of disinflation, gains in shelter and auto insurance have remained elevated, prolonging inflation’s journey back to the Federal Reserve’s 2% target. However, with real-time

Elon Musk and Donald Trump wouldn’t seem to be natural allies. One has made cutting greenhouse emissions a major business selling point. The other questions the need to cut emissions at all, denouncing most forms of clean energy as at best unnecessary and at worst destructive. One wants to move away from fossil fuels and convert all car sales worldwide to electric vehicles. The other believes EVs will be an economic disaster for America and that the nation should produce and burn more oil. Musk is now publicly endorsing Trump’s presidential reelection bid. And the Wall Street Journal, citing people familiar with the matter, reports that Musk is now planning on supporting Trump’s presidential campaign by committing $45 million a month to a new super PAC backing the former president. The donations, if they come to pass, are a significant development in not only the presidential campaign, but also the relationship between the two men, who both have fervent support among millions of fans who stand ready to believe most anything they say. Musk didn’t comment directly on the Journal