Fed's Goolsbee says September CPI data was discouraging - Yahoo Finance
Fed Governor Goolsbee’s assessment of September's CPI data as discouraging suggests a shift in the Fed's narrative, potentially moving away from the 'higher-for-longer' bond yield outlook. His comments, interpreted as dovish, imply growing concerns about inflation persistence and may accelerate market expectations for rate cuts in 2024. This perspective adds bearish pressure on the USD, while simultaneously supporting bullish positions in major currencies like the EUR, JPY, and GBP.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). Reuters' view aligns more closely with the upper third — JPMorgan and ING share that framing.
How firms align
JPMorgan is aligned with Goolsbee’s dovish framing, targeting EUR/USD at 1.10, signaling optimism towards the euro amid weakening USD momentum. In contrast, BofA remains contrary, holding a more cautious target at 1.04, reflecting concerns about Eurozone economic resilience against USD dynamics.
What the data shows
Recent research points to a potential shift in the Fed’s policy stance, with heightened discussions around easing rates. For in-depth analysis, refer to our Insight at /research/rate-pivot-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Goolsbee's comments reinforce dovish expectations for the Fed.
- 02Traders should monitor shifts in CPI-related narratives.
- 03Potential EUR/USD target at 1.10 as market incorporates rate cut timelines.
- 04BofA’s cautious stance indicates risk in bullish sentiment for the euro.
Market implications
Next key levels to watch include 1.075 for EUR/USD, aligning with our consensus target. Calendar events, including upcoming CPI releases, could further influence USD positioning and market sentiment.
Risks to this view
A reversal in this view could be triggered by a stronger-than-expected CPI print or a more hawkish tone from the Fed. Any signals indicating sustained inflation could defy current market expectations for rate cuts.
Sentiment by currency
USD EUR+JPY+GBP+Composite USD score: -0.65
Sources & References
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