The Fed has no intention of delivering an emergency rate cut before the FOMC meeting on September 18. The Fed wants markets to view the coming rate cuts as preserving the soft landing and supporting jobs, OCBC senior FX strategist Philip Wee notes.

US ISM Services Survey helps ease growth worries

“Although the sell-off spilled over into the rest of the world including US equities, the futures market expects a positive US opening today. The DXY Index extended its sell-off to 102.2 before ending the session at 102.7, near Friday’s closing level. The US Treasury 10Y yield plunged to 3.66% before returning to Friday’s 3.79%; bond sellers emerged below 3.68%.”

“The Fed has no intention of delivering an emergency rate cut before the FOMC meeting on September 18. San Francisco Fed President Mary Daly reckoned markets overreacted to last Friday’s weaker-than-expected jobs report triggering US recession fears. In her opinion, monetary policy works as intended to lower inflation by cooling the economy and the labour market.”

“The Fed wants markets to view the coming rate cuts as preserving the soft landing and supporting jobs. The better-than-expected US ISM Services Survey helped ease growth worries. The overall PMI improved to 51.4 in July, beating the consensus for a rise to 51.0 from 48.8 in June. The ISM employment index also strengthened to 51.1 from 46.1, while the prices index increased to 57.0 from 56.3.”