News isn’t only what’s said.
It’s:
Who says it
When they say it
And how many times
It’s tone, timing, and sequence.
One FED comment about a rate cut at the next meeting?
Maybe an outlier, ok!
Two FED comments about a rate cut at the next meeting?
Ah! There’s something there.
Three FED comments about a rate cut at the next meeting? (not happened yet)
Coordination!
Expect a rate cut next.
Makes sense?
No?!
Ok.
Let me rephrase that:
So far we’ve got two FED voters talking about their openness to cutting rates as soon as July (see the two comments above).
With that in mind.
The third comment (which I think will happen) will be the comment that seals the deal.
Think of it like this:
Your wife says…
"You know, Paris is supposed to be beautiful at this time of year".
Ok. Random comment. You ignore it. File it under "things women say".
A week later, she says:
"My colleague just got back from Paris, said the vibe was spectacular".
Alright. That's two. A coincidence? Maybe.
Or maybe… she’s messaging something.
Then, a few days later, you walk in and she’s watching Emily in Paris.
That’s it. That’s the signal. It’s not random anymore, it's a flight plan.
You’re going to Paris, start packing your pants.
One comment is noise.
Two is (maybe) a coincidence.
Three… is a coordinated strategy.
And right now, the Federal Reserve is at the second step.
The third one, and…
A 25bps cut in July will become the base case scenario at that point.
Cool, so what?!
Well, right now the July cut is only 22% priced in:
In other words…
If this pricing starts to grind up to 50% and beyond.
And it will, if we get another comment in favor of a July rate cut, then…
EURUSD should be around 1.17.
Not much else to add here.
Simple and straightforward.
Don’t react to a July rate cut after it happens.
Anticipate it!
Because markets move on expectations.
And with that also said…
The way for us to know whether you enjoy this type of content is to hit those cool buttons below, so don’t hesitate 😉 let us know.
But I have understand the part of who say it and how many times but the parr of when they say it I didn't grasp very well
Jay wonderful explanation I love that