FOMC 25bps vs 50bps??
The day has arrived!! Today is predicted to be the first rate cut by the FED since the COVID crash of March 2020! Two years after that in March 2022 the FED begun rate hikes in an attempt to stop the rising inflation. Now that inflation is close to the FEDs target of 2% it's time to stimulate the economy with cheaper borrowing.
The big question is, 25bps or 50bps?
Last week we saw the ECB (European central bank) cut their interest rates by 60bps from 4.25% to 3.65%, although this news has somewhat gone unnoticed, I'm not so sure the FED would have ignored it. If Europe has considerably cheaper borrowing rates than the US it could signal more growth to come from Europe and that would not be ideal for the US.
Now this doesn't necessarily mean that Europe will be favoured by investors for long as this is only the beginning of rate cuts, Europe could taper off earlier or US could be more aggressive later on, we don't know for sure but I don't think America would want to fall behind.
Prediction markets have shown the 50bps cut is growing in probability. Now at 61% chance for 50bps according to FED funds futures (At time of writing). 25bps is definitely priced in, but I don't think 50bps is priced in. This should see risk markets get a boost.
In terms of TA, the 4H BTC chart looks ready to breakout, back above the 200EMA and 4H support. Flip the 4H resistance and $65,000 is the target.
Be carful today with leverage as volatility will be crazy, plenty of whipsawing and generally the first move direction is wrong. Stay safe out there.
The big question is, 25bps or 50bps?
Last week we saw the ECB (European central bank) cut their interest rates by 60bps from 4.25% to 3.65%, although this news has somewhat gone unnoticed, I'm not so sure the FED would have ignored it. If Europe has considerably cheaper borrowing rates than the US it could signal more growth to come from Europe and that would not be ideal for the US.
Now this doesn't necessarily mean that Europe will be favoured by investors for long as this is only the beginning of rate cuts, Europe could taper off earlier or US could be more aggressive later on, we don't know for sure but I don't think America would want to fall behind.
Prediction markets have shown the 50bps cut is growing in probability. Now at 61% chance for 50bps according to FED funds futures (At time of writing). 25bps is definitely priced in, but I don't think 50bps is priced in. This should see risk markets get a boost.
In terms of TA, the 4H BTC chart looks ready to breakout, back above the 200EMA and 4H support. Flip the 4H resistance and $65,000 is the target.
Be carful today with leverage as volatility will be crazy, plenty of whipsawing and generally the first move direction is wrong. Stay safe out there.
Note
50bps is the decision.
I had a suspicion it would be 50bps, following closer to the ECB
Note
Strong breakout of the diagonal resistance!
$65,000 is the target.
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