News

RBA Cuts Interest Rates and Trump Criticizes the Fed

AUD

The Reserve Bank of Australia lowered interest rates by 25 basis points to record low of 0.50% today to offset the effect of the novel Coronavirus on the economy. The board expressed readiness to ease policy further if needed to support sustainable growth. The Australian dollar reacted positively to the bank's efforts to support the economy and gained against rivals. The AUDUSD rose to $0.6566, the EURAUD dipped to 1.6950, and the AUDNZD inched higher to 1.0465.

USD

The dollar index, which measures the greenback against a basket of major currencies, settled lower for the seventh consecutive day amid growing chances of significant monetary policy easing by the Federal Reserve. The CME Fed Watch tool is currently showing a 100% chance that the Federal Reserve will cut interest rates by 50 basis points on March 18. President Donald Trump attacked the Fed and Jerome Powell following the RBA's decision to cut rates. He tweeted that other central banks are easing their policies to support their economies while the Federal Reserve is forcing them to pay higher rates, and putting pressure on US exporters. He ended by urging the Fed to ease and cut interest rates big.

Equities

Major US stock-index extended recovery amid hopes that monetary policy easing would cover for the economic slowdown. On the other hand, market participants are optimistic over a conference call between the G7 finance ministers, Fed's Powell, and Treasury Secretary Mnuchin to coordinate on the financial and economic response to the Covid19. The Dow Jones Industrial Average futures rallied to 26747, the S&P500 futures advanced to 3094, and the Nasdaq futures mounted to 8891. In Europe, the German DAX recovered to 12156, while FTSE declined to a new five-month low of 21118 as the Coronavirus continued its spread in Italy.

Metals

Gold prices remained in a cautious mood awaiting fresh fundamental drivers. The price of a gold ounce fell below $1600 after hitting upside resistance above $1610, the price of a silver ounce hovered near $16.80, while palladium futures dipped to $2412.

Oil

Oil prices inched higher for the second consecutive day amid hopes that central banks and governments will do the necessary to support the economic growth and OPEC+ will agree on output cuts later this week to stabilize the market. The West Texas Intermediate crude futures rose to $48.55, and Brent futures appreciated to $52.89.

Major Economic Events

GMT Country Event Expectation Previous

9:30

UK

Monetary Policy Report Hearings

-

-

9:30

UK

Construction PMI (Feb)

48.8

48.4

10:00

EU

 CPI (YoY) (Feb)

1.2%

1.4%

10:00

EU

 Unemployment Rate (Jan)

7.4%

7.4%

12:00

G7

Finance Minister Conference Call

-

-

21:30

US

API Weekly Crude Oil Stock

-

1.300

 
Disclaimer
 

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