Interest rate outlook: 10YR Treasury hits 4.4% amid growing chance of no Fed cuts
10YR Treasury yields hit 4.4%
Fed Funds interest rate above 5.0%
Following a rate hike in July 2023 to a range of 5.25-5.50%, the US Federal Reserve has maintained its Fed Funds interest rate at this level. This policy stance underscores the central bank's commitment to curbing inflation, directly affecting the forex market by enhancing the dollar's appeal to investors seeking higher yields.
Fed Powell expected to cut rates in 2024
Indications from the Federal Reserve's dot plot and recent affirmations by Chair Jerome Powell signal an anticipated reduction in interest rates by about 75 basis points in 2024. Such a policy shift could influence the forex market by potentially softening the dollar's value against other major currencies, as lower rates decrease its yield attractiveness.
Interest rate traders say 0.50-0.75% cut
Traders in the futures markets (CME FedWatch tool) are relatively aligned with the Federal Reserve, projecting 2-3 cuts of 0.25% to interest rates throughout the remainder of 2024. This expectation is softer than at the beginning of the year, when projections were closer to 6-7 25bps cuts.
2.8% chance of no interest rate cuts in 2024
Although there are great expectations for several rate cuts, there is a growing chance of no rate cuts at all. While such odds from the CME are only 2.8%, there was a 0% chance a few weeks ago. This scenario indicates a cautious outlook towards US economic growth and inflation, which forex traders monitor closely for its implications on currency trends.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
This information has been prepared by tastyfx, a trading name of tastyfx LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. tastyfx accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
