Donald Trump has ramped up his calls for the Federal Reserve to cut interest rates and introduce “some quantitative easing”.
Lamenting the strong Dollar, the US president last night lashed out on Twitter complaining of Fed Chair Jerome Powell’s “horrendous lack of vision”, suggesting the Fed funds rate should be cut by 100 basis points to between 1 per cent and 1.25 per cent “over a fairly short period of time”.
US officials and Trump himself insist there is no risk of recession, yet demand the kind of ultra-stimulative monetary policy used to counter the global financial crisis 12 years ago.
The Dollar is trading near a three-week high this morning, as expectations policymakers around the world will unleash fresh stimuli drove an improvement in appetite for riskier assets and lifted US government bond yields.
US Treasuries yields have pulled away from three-year lows, partly supported by prospects of Germany boosting spending and China looking to introduce more economic support measures.
The Chinese Yuan was down 0.2 per cent overnight at 7.0661 per Dollar after the People’s Bank of China (PBOC) set its new lending rate slightly lower. The benchmark publication follows the PBOC’s weekend announcement of interest rate reforms designed to lower corporate borrowing costs.
The Dollar is higher across the board, tracking the rebound in yields. Posting its gains for three straight sessions, the greenback continued to build momentum after the reports of Germany considering stimulus measures.
Meanwhile, the Euro was higher at $1.1086, but it was still close to a two-week trough of $1.1066 reached on Friday on lingering concerns over political developments in Italy.
The Australian Dollar edged up 0.15 per cent to $0.6776 after the Reserve Bank of Australia (RBA) released minutes from its August meeting suggesting the central bank was not in a hurry to cut rates again. The RBA seemed to have left the door open to further easing, but analysts say the prospect of an immediate rate cut was limited.
Germany, China to deliver stimulus to ward off recession
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