Carley Garner, Senior Strategist and Broker at Decarley Trading, joins TheStreet to discuss what a Fed rate cut could mean for the U.S. dollar.
Transcript:
Caroline Woods: If sentiment is overly bearish on the dollar, what could Fed rate cuts mean for the dollar? Because the latest inflation data might make it more difficult for the Fed to remain on hold. So what happens when the Fed cuts to the dollar?
Carley Garner: It’s going to be very interesting to see how the market works this out. We’re in a weird disconnect here where the market’s not well. The currency market specifically is not paying attention to interest rate differentials. And I don’t recall another time in my career that it’s really been this lopsided. So to give you an example, if somebody is holding money in a bank in Europe, they’re probably earning somewhere around 2%. If they’re earning, if they’re sitting money in a bank in the United States, they’re probably earning double that or maybe a little bit more. So in theory, the US dollar should be experiencing strength just because of the interest rate differential. So even if the Fed starts making changes to policy, I’m not sure that it’s going to affect the currencies as much as we think it might simply because the market’s already so offsides.
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