Fed Has Urgently Cut the Key Interest Rate

The US dollar continues to lose ground against a basket of major currencies. The dollar index (#DX) closed yesterday in the red zone (-0.20%). The US Federal Reserve unexpectedly lowered its key interest rate by 50 basis points to 1.00%-1.25% two weeks before the planned monetary policy meeting. The head of the Central Bank Powell said that the US economy remained stable, but the COVID-19 virus had brought new risks and problems. The Hong Kong Monetary Authority (HKMA) on Wednesday also cut its key rate by 50 basis points to 1.5% after the Fed. Today, investors are also waiting for the interest rate decision by the Bank of Canada. According to forecasts, the key rate will remain unchanged at 1.75%.

Also, investors remain focused on the coronavirus. The World Health Organization (WHO) said on Tuesday that coronavirus is not transmitted as efficiently as the flu, but its mortality rate is higher by 3.4%. Meanwhile, South Korean authorities intend to allocate almost $10 billion to fight the coronavirus epidemic, as well as to support businesses and citizens.

The "black gold" prices jumped after mining restrictions. Currently, the WTI crude oil futures are testing the $47.65 per barrel mark. At 17:30 (GMT+2:00), crude oil inventories will be published in the US.

Market indicators

Aggressive sales were observed yesterday in the US stock market: #SPY (-2.86%), #DIA (-2.89%), #QQQ (-3.21%).

10-year US government bonds yield fell sharply again. At the moment, the indicator is at the level of 0.98-0.99%.

• - Data on business activity in the UK at 11:30 (GMT+2:00);
• - Change in the number of people employed in the non-farm sector from ADP in the USA at 15:15 (GMT+2:00);
• - US ISM Non-Manufacturing PMI at 17:00 (GMT+2:00);
• - Bank of Canada interest rate decision at 17:00 (GMT+2:00);
• - The Fed's Beige Book at 21:00 (GMT+2:00).

by JustMarkets, 2020.03.04

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.