New York Fed President John Williams is set to speak at 2315 GMT (1915 US Eastern time) during the Bank of Mexico Centennial Conference. Earlier, Dallas Fed President Lorie Logan took part in a panel at the same event but did not provide any insights into a possible interest rate cut in September. Recent discussions indicate that a rate cut in September is becoming more likely. There are concerns about job market risks and slow GDP growth. Fed official Musalem stressed that more data is needed before any decisions on a rate cut can be made.

Financial News Highlights

Key financial news includes Trump’s push for a 15-20% minimum tariff on EU goods. Barclays predicts two Fed interest rate cuts in 2025, warning that there’s a 50% chance of a US recession. Meanwhile, Bitcoin struggles to stay above $110K, and US stock markets closed lower, with declines in the S&P, Dow, and Nasdaq. A general risk warning highlights the high risks involved in foreign exchange trading, noting that leverage can increase potential losses. It recommends caution and the importance of understanding these risks. InvestingLive may receive compensation related to ads on their website. Everyone is looking forward to John Williams’ speech tonight. Any indication supporting the growing talk of a September rate cut could greatly impact the markets. His remarks will be closely examined for confirmation of the dovish stance hinted at by Powell. The case for a rate cut is becoming stronger, with recent inflation rates cooling to 2.8% and the latest jobs report showing a weaker-than-expected gain of 160,000 jobs. This slowdown has led Fed officials to openly discuss “rising job market risks.” For derivative traders, this could spark strategies aimed at lower interest rates using options on futures contracts.

Political And Economic Concerns

Currently, there are political discussions about a potential 15-20% tariff on all goods from the European Union. The trade disputes during 2018-2019 showed how such tensions can cause market volatility, affecting the VIX index and strengthening the US dollar. This indicates that buying VIX call options or other volatility products may be a wise hedge against sudden market anxiety. The overall economic situation calls for caution, especially as major banks assess the US recession risk at 50%. The yield curve has been inverted for much of 2024—an indicator often associated with recessions—and the recent GDP growth figure stands at only 1.2%. In this setting, protective measures like buying put options on key stock indices like the S&P 500 may become more attractive. Despite a weak US economy, the dollar continues to rise, reflecting its status as a safe haven. As long as trade concerns and recession fears dominate the narrative, investors are likely to keep flocking to the dollar. This trend will continue to pressure currencies like the euro and should be a major consideration for any foreign exchange strategies. Create your live VT Markets account and start trading now.

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