0833 GMT - The two-month correlation of EUR/USD with money markets' pricing of the likelihood of a Federal Reserve interest-rate cut in May is a notable 90%, which is fractionally above the probability for March, says Alan Ruskin, macro strategist at Deutsche Bank Research. "We would expect this gap to grow as the market puts more weight on the May expectation," he says in a note. Were May to end with no Fed rate cut, EUR/USD would trade with a 1.05 handle, while, in contrast, because a Fed rate cut in May is still 90% priced, a 25 basis point cut that month would presumably not imply much increase in EUR/USD from current levels, he says. EUR/USD rises 0.1% to 1.0776. (emese.bartha@wsj.com)
(END) Dow Jones Newswires
February 08, 2024 03:33 ET (08:33 GMT)
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