USDJPY
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USDJPY
Fed's Daly says she leans towards more cuts in 2026
Key Takeaways (30s Read)
Daly hints at potential rate cuts in 2026, influencing market expectations.
Federal Reserve Bank of San Francisco's President Daly has indicated a potential for interest rate cuts in 2026, drawing market attention. She considers one or two scenarios for upcoming cuts but highlights the current uncertainty. Notably, she expresses more concern for labor market vulnerabilities than inflation. Daly states that if the job market shifts from 'no firing' to 'some firing', the Fed may be compelled to cut rates. The market is pricing in an 18% chance for a cut in March, with one cut nearly fully priced in for June 17's meeting. Next week, non-farm payroll data is due, and this week has seen pricing move from 48bps to 57bps, influenced by unexpectedly soft employment data.
AI Analyst
AI Opinion
"Daly's remarks indicate rising concerns surrounding potential rate cuts in 2026. Her emphasis on vulnerabilities in the labor market suggests that if conditions deteriorate, policy changes by the Federal Reserve could be imminent. The market has already begun pricing in expectations for rate cuts, and the upcoming non-farm payroll announcement will play a crucial role in influencing market dynamics. If the labor market shows signs of instability, significant policy adjustments may be necessary. Investors need to determine whether the expectations for rate cuts will persist or if signs of shifting trends will emerge. Such a situation requires careful monitoring, particularly in the context of trading pairs like USDJPY."
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