Barclays Bank: It is expected that the Federal Reserve will make three 25 basis point cuts this year
Barclays foreign exchange strategist Skylar Montgomery Koning stated that the dollar is about to rebound, as traders have overestimated the extent of the Federal Reserve's rate cuts and underestimated Tuesday's retail sales data. She predicts that stronger-than-expected retail sales will shift market bets towards smaller rate cuts, thereby boosting the dollar. Currently, with only two days left until the Fed's interest rate decision, trader uncertainty about this decision is at its highest level since 2007, and this consumer report is one of the last pieces of information before the announcement of rates. Barclays expects that the Fed will make three 25 basis point cuts this year because US economy remains strong. Montgomery Koning said that markets tend to overreact in terms of expectations for rate cuts. She said: "During those soft landing periods if you look at historical data, markets always overestimate how much Federal Reserve would cut rates; when expectations reach a turning point, then dollar rebounds."
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