Did you know that on August 28th, the Federal Reserve announced a change to their monetary policy framework?
The central bank’s shift will put more of a focus on achieving full-unemployment and allow inflation to at-times rise above their 2.0% inflation target. The result is that the Fed will keep interest rates low for a longer period of time. A lower interest rate environment usually leads to a weaker dollar.
As the Fed approached their decision, Fed Chairman Jerome Powell and other policymakers began subtly changing their messaging, alerting market participants that a change was on the horizon.
Since it is the beginning of football season, I will use a football metaphor. The Fed was telegraphing their pass, purposefully. Tempus was listening, which is why we alerted our clients of an upcoming monetary environment that would be tough on the greenback.
The U.S. dollar has lost 5.5% versus the Euro since the start of July. By acting early and locking in future needs, a number of our clients have protected themselves against adverse market moves.