11/ 06/ 2020

Fed Offers No Surprises, Next up, Initial Jobless Claims

The dollar bounced against riskier currencies and the safe-haven yen hit a one-month high on Thursday as the U.S. Federal Reserve’s dour economic outlook spooked investors. The moves recouped the greenback’s initial losses after the Fed’s policy stance, projecting rates near zero for years, was welcomed as a sign of its continued support for asset prices.The greenback fell to three-month troughs against the euro, sterling and Swiss franc after the Fed statement. It slid to a three-week low versus the yen.

Most major market strategists agreed that the Fed delivered what the market pretty much expected that it wouldn’t do anything. Its monetary policy statement didn’t contain any surprises and was straightforward, offering little details. But who really expected the Fed to give any details at this time. The impact of the coronavirus on the economy is still a breaking story so the forward guidance will come later. Right now, investors just wanted to hear that the Fed will hold rates near zero for some time and that policymakers have their backs.

As the markets react to FED Chair Powell and the FOMC economic projections, there could be another curveball ahead - U.S jobless claims.

10/ 06/ 2020

Dollar falls as nerves set in before Fed policy decision

The dollar fell against most currencies on Wednesday amid some speculation the U.S. Federal Reserve could take steps to curb a recent rise in bond yields in a policy decision later in the day. The main focus is a Fed policy meeting later on Wednesday. While no major changes are expected, recent rises in yields have pushed up the dollar due to increasing signs that the U.S. economy is slowly rebounding from the health crisis shock, though a full-fledged recovery is still distant.
The EU’s chief Brexit negotiator, Michel Barnier, is scheduled to speak later on Wednesday, which may yield details that will help determine whether market sentiment will improve.

08/ 06/ 2020

Week Ahead | FOMC Meeting, Fed Decision, Eurozone GDP Eyed

The U.S. dollar fell against the antipodean currencies and the British pound after surprising improvement in U.S. labor market data bolstered expectations for economic recovery, which reduced safe-harbor demand for the greenback. Sentiment has improved dramatically in the currency market as traders focus on signs of a rebound from the coronavirus outbreak as economies reopen from lockdowns, which has hurt the dollar and driven money into so-called risk-on trades. The jobless rate also fell to 13.3% last month from a post-World War Two high of 14.7% in April, offering hope that the world’s largest economy is starting to stabilize after the pandemic triggered a wave of job cuts.

The Euro recorded its third straight weekly rise, pushed by improving risk appetite and backed also by the ECB’s decision to boost its pandemic emergency purchase program (PEPP) by €600 billion on Thursday. The British pound also enjoyed positive momentum and surpassed the 1.27 barrier, although the last round of Brexit talks between UK and EU negotiators was concluded without any notable progress.

It’s a quiet day ahead on the economic calendar. A lack of stats leaves the markets to grapple with geopolitical risk and fiscal and monetary policy.

04/ 06/ 2020

ECB in Action and the U.S Weekly Jobless Claims in the Spotlight, Will Lagarde deliver more support?

The euro strengthened for the seventh day yesterday as the prospects of more stimulus and hopes for economic recovery boosted euro across the board.  Sterling strengthened against a broadly weaker dollar Wednesday as Britain showed signs it might be willing to compromise on sticking points to reach a Brexit deal. The dollar fell against most currencies as investors pondered what the potential fallout might be from the mass protests against racism spreading across the United States. And prospects for more government stimulus and a global economic recovery emboldened investor to step up holdings of riskier assets.

The dollar strengthened against the Japanese yen yesterday as government stimulus expectations support investor confidence in an economic recovery from the coronavirus. 

The ECB is in action later today and will influence the majors, as will the weekly jobless claims from the U.S.