Fed Cuts Rates By 0.5%

Dollar Down Following Fed Rate Cut

The US dollar has been flat across the European morning today in the wake of the Fed’s historic, surprise rate decrease yesterday. The Fed cut rates by half a percent in a bid to help buffer the economy against the rising threat from coronavirus. USD had been heavily down ahead of the rate cut and the outlook remains bearish, with big question marks hanging over the mid-March FOMC and whether the Fed will cut again. USD index trades 97.24 last, just up off the week’s lows for now.

Euro Higher on Fed Rate Cut

EURUSD has been a little higher today on the back of the Fed rate cut yesterday. The Euro has been a strong beneficiary of USD weakness over the last fortnight. However, the upside might prove to be short-lived as traders are now anticipating that the ECB will be forced to cut rates very shortly too. EURUSD trades 1.1161 last.

BOE Easing Expectations Rise

GBPUSD has been weaker today with price continuing to hug the 1.2769 support level. GBP sentiment remains skewed to the downside following comments from BOE’s Carney yesterday who promised a “powerful and timely” response to coronavirus. The focus will now be on incoming BOE Governor Andrew Bailey who testifies in the Commons today. Traders will be looking for any indication that the governor is likely to cut at his first meeting later this month.

Risk Sentiment Recovers Following Fed Rate Cut

Risk assets have been fighting to recover today. Despite a retracement later in the session yesterday, following the surprise Fed rate cut, the SPX500 is now climbing again today as the market stabilizes. With the potential for further cuts from the Fed and growing expectations of co-ordinated responses from other central banks, equities have some scope for further upside correction here. The SPX500 trades 3057.83 last, back above the 3025.25 level again for now.

JPY & Gold Down

Safe havens have been weaker today. In light of the rally in equities, both JPY and gold have been lower against USD though gold is rallying off the lows currently. USDJPY trades 107.49 last, recovering off the lows traded earlier in the week. XAUUSD trades 1640. 87 last, still above the broken bearish trend line for now.

Crude Climbing Higher

Oil prices have been a little higher today also, benefiting from the pickup in risk assets in response to the Fed’s surprise rate cut yesterday. Crude trades 47.96 last, still within the middle of the bearish channel for now.  The latest data from the API yesterday showed US crude stores rose by less than expected last week, focus will now be on the headline EIA report due later today.

Loonie Looking Listless

USDCAD has been weaker today as the Fed’s rate cut drags USD down. However, the BOC meeting later today could change this dynamic with an increased level of pressure on the BOC to act. The BOC was not initially expected to cut at this meeting though expectations have now changed. USDCAD trades 1.3346 last, just above the 1.3345 level for now.

Aussie on The Up

AUDUSD has been trading to the topside over the European session so far today as the Aussie benefits from the drop in USD following the Fed’s rate cut. Despite the RBA itself easing earlier in the week, AUDUSD has traded back up to .6616 as of writing.