Analysts at Fitch say the Fed has “an incentive to start cutting rates sooner than later”

US economic research analysts at Fitch with the heads up on earlier Federal Open Market Committee (FOMC) rate cuts:

• The Fed will be worried (about) additional weakness in the labor market down the road
• Powell signalled that the balance of risk between the unemployment rate and inflation is now two-sided and the labour market is now back in balance
• Which gives the Fed an incentive to start cutting rates sooner than later, now that inflation seems to be back on that path down to 2%

The USD has gained a little ground here in Asia on Monday morning after the US political violence over the weekend. First was January 6, 2020, now this:

• Monday morning open levels – indicative forex prices – USD a touch stronger

ps. Bear in mind that it’s a Japanese holiday, which is extending the super-thin liquidity conditions until Singapore and Hong Kong get more active. Having said that the absence of Japan will leave a hole all day:

• Heads up for a holiday in Asia today – Japanese markets are closed (no UST physical trade)

This article was written by Eamonn Sheridan at www.forexlive.com.