USD flows: USD downside risk on Dudley call for an immediate rate cut
Former NY Fed president Dudley has written an article calling for an immediate rate cut to avoid recession. His status suggests the market will need to price in a July cut as a more significant risk, puting downward pressure on the USD.
Former NY Fed president Bill Dudley has published an opinion piece on Bloomberg saying that he has changed his mind and thinks the Fed should cut rates now, and that waiting until September unnecessarily increases the risk of recession. This is probably not a deliberate plant from the Fed, but Dudley is a significant figure and historically not a dove, so this may well mean the market prices in a significant risk of a cut at the July 31 meeting. Currently this is seen as a less than 5% chance, so there are clear USD downside risks if the market prices in even a modest chance of a cut.
