Market News & Analysis


Top Story

G7 Uneventful, Fed is all about Fireworks

Traders were hoping for some kind of global stimulus earlier today to help stem the global slowdown currently from the effects of the coronavirus.  Instead, all they got was a statement that said fiscal stimulus was ready if needed.  However, in a shocking twist of events, the US Federal Reserve cut rates 50bps in an emergency move to help promote growth in the economy.  In Powell’s press conference he said fundamentals remain strong, however the coronavirus and measures taken to contain it will take a toll on the economy.  As such, the Fed is doing their part in support of the economy.  He said the labor markets remain strong, however he also mentioned concerns about consumer spending.

Source:  Tradingvewi, City Index

As a result, the DXY turned lower and many of their counter-currencies have gone bid. As we have seen since February 20th when DXY reached its target for the descending wedge near 100,  price has moved lower over the last 8 days to today’s low of 96.98.  The next important support level for the DXY is the top trendline of the falling wedge near 96.75.  Below that support is at the end of December lows near 96.36.  First resistance is at today’s highs near 97.70, then the 200 Day Moving Average at 97.82.

Source:  Tradingvewi, City Index

The one thing traders need to be aware of is that Powell also indicated that the Fed is in constant contact with other Central Banks.  One needs to watch for additional global stimulus from other Central Banks.  The RBA cut earlier at their scheduled meeting.  The BOC is scheduled to meet tomorrow.  Inter-meeting stimulus may follow from other countries to help their own economies during this “temporary” slowdown.  The situation is obviously very fluid as more information is available to governments.  Expect more volatility this week!


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.