20 June 2019 : A collective sigh of relief has roared across financial markets after the Federal Reserve confirmed market expectations of the probability that interest rates in the United States will likely be cut over the coming months.

The Fed has essentially left the gates wide open for speculation to persist that a reduction in US interest rates could occur as early as July. Investors on a global level have historically enjoyed the suggestion of lower interest rates from developed central banks, and the most developed central bank of them all signalling lower interest rates is going to fuel another market rally. Equity markets will not be the only asset class to enjoy this news, with the prospects of a weaker Dollar moving forward accelerating another superb move higher in Gold.

It is emerging markets however who will most enjoy the news of lower interest rates. We can expect for flows to move back towards emerging markets moving forward, meaning that EM stocks and their currencies will continue to edge higher against the USD. This rally will stretch across multiple corners including the Chinese Yuan, Malaysian Ringgit, South African Rand and as far afield as the Mexican Peso.

Emerging markets across Asia, Africa, Latin America and the Middle East will all move to applaud the news that lower interest rates in the United States will encourage capital to spread across multiple developing regions.

Source : Lukman Otunuga, FXTM Research Analyst 

Reporting for EasyKobo on Thursday , 20 June 2019 in Lagos, Nigeria