Charu Chanana, Global Market Strategist and Head of Forex Strategy at Saxo Markets, stated that overall, the information conveyed by global data is very clear, which is that we are entering a period of economic slowdown.

What we need to pay attention to is whether this slowdown will occur suddenly, which is the reason why the market is in a more difficult position. If this is a milder slowdown and the Federal Reserve is ready to take action and respond to it, then the market may continue to remain in a more comfortable position.

Chanana pointed out that even after the Federal Reserve starts cutting interest rates, in most cycles, a recession often occurs after the first rate cut. Therefore, people should proceed with caution and not immediately buy on dips, because every time the US economy slows down, it initially appears to be entering a soft landing phase, but in reality, achieving a soft landing is very difficult.

Chanana stated that certain sectors of the US economy show signs of slowdown and are affected by high interest rates. However, at the same time, other sectors of the US economy also demonstrate strong resilience. Some surveys by the Federal Reserve suggest an economic slowdown, but other hard data still remains solid at the margin, which explains why the information we received in last Friday's job report was so confusing.

Of course, the US economy is indeed slowing down. The impact of high interest rates is gradually permeating into more and more social sectors, but it does not appear that there will be a comprehensive collapse situation in the near future.

Chanana stated that another factor to note is how the AI theme will develop, as it has been driving the US stock market for the past few months. We have seen a slight retreat in spending on AI projects, as some people have questioned it and the investment has not yet translated into earnings.

Regarding the outlook for the US dollar and its current performance, Chanana stated that the dollar has responded to expectations around the Federal Reserve potentially starting loose policies as early as next week, and "we have also seen some pressure." If you look at speculative dollar positions, the data of the past two weeks has turned net short. So, there are some reasons for concern, but I'm not bearish on the dollar right now.

If the US economy has problems, the situation in the Eurozone would be even more severe. It will be difficult to find alternatives for the outflow of US dollars, especially with the approaching US elections, the dollar may continue to be supported. She said, "Therefore, I do not think the dollar will continue to decline."

Regarding the upcoming September meeting of the Federal Reserve, Chanana said, "My inclination is a 25 basis point rate cut, as I have said, there is no reason to panic. If the Fed cuts rates immediately by 50 basis points, it may cause some panic."

She added, "I think they will use very dovish language and leave room to cut rates by 50 basis points in November or December if necessary. A 25 basis point rate cut combined with very dovish rhetoric will offset the impact of not cutting rates by 50 basis points now."

Editor/Lambor