Published: Mon, July 08, 2019
Markets | By Otis Pena

Federal Reserve unlikely to cut rates this month: Scaramucci

Federal Reserve unlikely to cut rates this month: Scaramucci

ASB Bank also said that Powell's testimony could move the United States dollar significantly as market participants will be looking for whether market pricing of a 25 basis-point rate cut in July will be ratified.

Gold climbed 0.5% t0 $1,407.

Deutsche Bank's news helped limit the downbeat sentiment in broader Europe, with the pan-European STOXX 600 index adding 0.07%. The market's sentiments were hit by tempered expectations on the U.S rate cut after the strong jobs data.

European equities drifted lower in morning trading. In his defense, Powell has said the Fed is an independent bank "insulated from short-term political pressures".

That being said, later on the market got a bit of relief due to Jerome Powell suggesting that the Federal Reserve was also going to do whatever it takes to keep the economy going, and other words keeping interest rates low.

Those expectations were tempered by a USA labor report on Friday that showed nonfarm payrolls jumped 224,000 in June, beating forecasts for 160,000, in a sign the world's largest economy still had some fire.

Traders will be listening closely when Fed Chair Jerome Powell testifies to Congress on monetary policy and the state of the USA economy on Wednesday.

Former White House Communications Director Anthony Scaramucci on the US job market, the economy, the outlook for Federal Reserve policy, USA trade talks with China and the 2020 presidential race.

Buhari in Niamey signs agreement establishing AfCFTA
The Niamey Summit will be one of the most attended AU Summit by Heads of State and other personalities in recent time, he noted. The AfCFTA will remove barriers and tariffs and open up trade in Africa for the continent's more than 1.2 billion people.

The dollar held near three-week highs on Monday, keeping its gains after last week's strong data lowered expectations for a sharp Federal Reserve interest rate cut. "Effectively the debate has switched from a 25bps or 50bps rate cut to a 25bps cut or none" wrote Rodrigo Catril, the forex strategist at National Australia Bank.

In currency markets, action was in the Turkish lira TRY= which weakened 2% against the dollar, the lowest since June 28, after Turkey's central bank governor Murat Cetinkaya, whose four-year term was due to run until 2020, was replaced by his deputy Murat Uysal.

Gold prices surged on Monday and saw consolidation above the $1,400 pivot as global growth concerns and interest rate cuts came to the center stage. The euro bought $1.1226, little changed.

After hitting a six-month low to the dollar on Friday as a result of poor economic data and a rise in expectations that the Bank of England will cut interest rates, the British pound was last quoted at $1.2513 GBP=D3, down 0.2% on the day.

Geopolitical tensions continue to be in focus after Iran said it will break a limit set on uranium enrichment under its 2015 nuclear accord with major world powers.

USA equity futures edged lower and Europe stocks drifted following steep declines in Asia as investors kicked off the busy week in a cautious mood.

West Texas Intermediate crude declined 0.1% to $57.48 a barrel.

US producer prices are due on Friday.

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