Daily Update - 10th June 2020
The U.S. dollar traded lower against all of the European currencies on Tuesday ahead of the Federal Reserve’s monetary policy announcement. Investors took profits on risk trades as the Dow Jones Industrial Average closed lower for the first time in eight trading days. We’ve had a very strong rally in stocks and high beta currencies over the past few weeks and, with such a major event risk ahead, profit-taking is not unusual. The U.S. dollar will be in focus tomorrow, but there’s very little consistency in its performance today. The greenback traded lower against the Japanese Yen and Swiss Franc, but moved higher against other major currencies. That should change tomorrow, however, as the FX market is driven by U.S. dollar flows. Based on the latest price action, investors do not expect much from the Fed. It is not expected to change interest rates or increase Quantitative Easing, but the FOMC should still be a big mover for currencies and equities. Economic Projections: It's been six months since the Fed’s last economic projections were released. On Monday, the National Bureau of Economic Research confirmed that the U.S. economy fell into recession in February. Its projections for 2020 growth will be ugly, but investors are prepared for that. Instead, it will be focused on how long before a meaningful recovery. While the following table below show broad based deterioration in the U.S. economy since the April meeting, more recent measures, particularly the jobs and manufacturing reports, have shown consistent improvements. The U.S. economy is on the road to recovery but will it take nine to 12 months, or two to three years? The faster the recovery, the better it is for the U.S. dollar. Yesterday’s Market
Yesterday’s explained
Today’s Market
Today’s Focus
