G7 Uneventful, Fed Is All About Fireworks
Joe Perry | Mar 03, 2020 02:24PM ET
Traders were hoping for some kind of global stimulus earlier today to help stem the global slowdown currently from the effects of the coronavirus. Instead, all they got was a statement that said fiscal stimulus was ready if needed. However, in a shocking twist of events, the U.S. Federal Reserve cut rates 50bps in an emergency move to help promote growth in the economy. In Powell’s press conference he said fundamentals remain strong, however the coronavirus and measures taken to contain it will take a toll on the economy. As such, the Fed is doing its part in support of the economy. He said the labor markets remain strong, however he also mentioned concerns about consumer spending.
Source: Tradingvewi, FOREX.com
As a result, the DXY turned lower and many of its counter-currencies have gone bid. As we have seen since February 20, when DXY reached its target for the descending wedge near 100, price has moved lower over the last 8 days to today’s low of 96.98. The next important support level for the DXY is the top trendline of the falling wedge near 96.75. Below that, support is at the end of December lows near 96.36. First resistance is at today’s highs near 97.70, then the 200-day moving average at 97.82.
Source: Tradingvewi, FOREX.com
The one thing traders need to be aware of is that Powell also indicated that the Fed is in constant contact with other Central Banks. One needs to watch for additional global stimulus from other Central Banks. The RBA cut earlier at its scheduled meeting. The BoC is scheduled to meet tomorrow. Inter-meeting stimulus may follow from other countries to help their own economies during this “temporary” slowdown. The situation is obviously very fluid as more information is available to governments. Expect more volatility this week.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.