News

Dollar Index Extends Decline on Fed’s Emergency Rate Cut

USD

The dollar index, which measures the greenback against a basket of major currencies, fell further to a seven-week low of 96.87 on the Fed's emergency rate cut. The Federal Reserve lowered interest rates by 50 basis points in the first emergency move since the financial crisis in 2008. Powel stated that the increased risks to the economic outlook due to the Coronavirus spread urged the Federal Reserve to take such action. He added that the Fed likes the current policy stance as it is appropriate, and remains ready to act depending on the flow of the events. The US Treasury yields declined to fresh record lows with the 10-year yields dropping to 0.916%, and the 30-year yields tumbled to 1.529%. The CME Fed Watch Tool is currently showing on more rate cut in April by 25 basis points. Today, market participants are looking forward to the ADP Employment Change and the ISM Non-Manufacturing PMI.

Equities

Major US stock-index futures finished lower in a bumpy session despite the Fed's rate cut. Stocks rallied initially but couldn't hold gains and fell to the negative territory but halved losses into the close. During the Asian session, stock futures edged higher where the Dow Jones Industrial Average futures rose to 26347, the S&P500 futures surged to 3045, and Nasdaq futures advanced to 8739. In Europe, the German DAX followed US indices footsteps and climbed to 12029, while the FTSE MIB dipped again to 21750.

Metals

Gold prices soared as the Fed reduced interest rates to offset the impact of the Coronavirus on the economy. The price of a gold ounce climbed to $1652, the price of a silver ounce soared to $17.47, while palladium futures dropped to $2360. The gold-silver ratio settled again near record high at 95.25.

Oil

Oil prices settled higher for the second consecutive day amid hopes that OPEC+ will agree to deepen output cut this week. OPEC and its allies will meet in Vienna on Thursday and Friday to agree on enlarging and extending production cuts to offset the drop in demand happening due to the Coronavirus outbreak. On the other hand, the American Petroleum Institute reported a buildup in US weekly crude oil stock by 1.690 million barrels. The US Energy Information Administration will report the official figures later today. The West Texas Intermediate futures dipped to $47.43, and Brent futures declined to $52.02.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EU

 EZ Services PMI (Feb)

52.8

52.5

9:30

UK

UK Services PMI (Feb)

53.3

53.9

Tentative

UK

Monetary Policy Report Hearings

-

-

10:00

EU

 Retail Sales (MoM) (Jan)

0.6%

-1.6%

13:15

US

 ADP Nonfarm Employment Change (Feb)

170

291

15:00

US

 ISM Non-Manufacturing PMI (Feb)

54.9

55.5

15:00

CA

 BoC Interest Rate Decision

1.75%

1.75%

15:30

US

Crude Oil Inventories

2.644

0.452

19:00

US

 Beige Book

-

-

 
Disclaimer
 

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