Fed May Consider Interest Rate Cut as Early as September Amid Economic Slowdown, US Service Sector Contracts, Wall Street and Foreign Exchange Markets React

On Wednesday, the United States central bank, the Fed, announced that it may consider making its first interest rate cut as early as September. This news raised expectations for an interest rate cut among investors. However, the June ISM purchasing managers’ index figure for the US service sector fell below 50 to 48.8 points, with a forecast of 52.7. According to the purchasing manager index, a figure above 50 indicates an increase in activity and a figure below 50 indicates a decline.

The minutes of the Fed’s previous interest rate meeting were also released on Wednesday, revealing that the Fed’s Open Market Committee is divided on how long they want to keep interest rates high. Wall Street had a bullish day, followed by Asian stock markets on Thursday with the Asia Dow index up by more than a percent. In Japan, the rate of increase was almost one percent due to discretionary consumption and the financial sector.

Exchange rates in mainland China and Hong Kong were slightly down while there was a small increase in India and a stronger increase in South Korea and Taiwan on the foreign exchange market. The yen strengthened on Thursday morning against the dollar, euro, and pound by 0.1 percent on Bloomberg’s commentary by City Index and Forex.com’s Fawad Razaqzada stating “Bad news is good news”. European stock exchanges are expected to open cautiously based on index futures with some futures slightly up but Euro Stoxx 50 future down by 0.04 percent as stated from wall street sources