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The Fed is under pressure to cut rates substantially at next week’s FOMC meeting. Analysts at Nordea think they will deliver a 75 bp rate cut and expect higher EUR/USD.

Key quotes 

“There is currently priced in a rate cut of around 90 bp. So the Fed needs to deliver big or go home. We think the former. Our forecast is a rate cut of 75 bp.”

“Markets are pricing in a clear risk of the Fed going to 0%. We see a high risk of that scenario unfolding as well as the Fed has clearly said that it prefers to move quickly and proactively in downturns.”

“We still look for higher EUR/USD (target 1.17), lower long bond yields in USD (target 0.30%) and at the very best mediocre risk appetite for equities.”

 

Expert score

5

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