RBA Has Lowered Interest Rate

The US dollar continued to lose ground against a basket of major currencies. The dollar index (#DX) closed with a significant decrease (-0.78%). The US dollar is still under pressure amid rising expectations that the Fed will lower interest rates to support the US economy amid the spread of the COVID-19 virus. The US government bonds yield fell significantly. Also, today, US President Donald Trump called on the Fed to significantly reduce interest rates, noting that a higher cost of borrowing negatively affects exports and is disadvantageous for the country.

Investors were encouraged by the news that the number of coronavirus infected outside of China from Sunday to Monday increased by only 700 people against an increase of 1.7 thousand a day earlier. However, the problem is that at the moment the main thing about the epidemic is still unknown: when and how will its spread end.

The Reserve Bank of Australia (RBA) cut its key interest rate by 25 basis points to a record low of 0.50%. RBA Governor, Philip Lowe, also said that the regulator could continue easing the policy. "The global outbreak of the coronavirus is expected to delay progress in Australia towards full employment and the inflation target. The Board therefore judged that it was appropriate to ease monetary policy further to provide additional support to employment and economic activity," Lowe said.

The "black gold" prices continue to recover. Currently, futures for the WTI crude oil are testing the $48.30 mark per barrel.

Market indicators

Yesterday, there were aggressive purchases in the US stock market: #SPY (+4.33%), #DIA (+4.90%), #QQQ (+5.16%).

The 10-year US government bonds yield has become stable. At the moment, the indicator is at the level of 1.16-1.17%.

• - Construction PMI in the UK at 11:30 (GMT+2:00);
• - Consumer price index in the Eurozone at 12:00 (GMT+2:00).

by JustMarkets, 2020.03.03

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.