Economist: sharp change in Fed market pricing doesn't reflect fundamentals

Mohit Kumar, economist at Jefferies Group, said in a report that the currency market's recent sharp repricing of the Fed's rate cuts (as much as 125 basis points this year, which eased off on Tuesday) is an overreaction that does not reflect fundamentals.

The Fed is not expected to cut rates either by 50 basis points in September or by 100 basis points or more this year, and “despite the aggressive moves, we don't think the fundamentals have changed much.” Jefferies expects pricing in the money market to be cut.