- March 3, 2020
- Posted by: John Curran
- Category: Market News
Good morning,
In an emergency measure the FED has just cut its benchmark interest rate by .5% from 1.75% to 1.25%. The unexpected move thus far has had little effect on the market as the move was unexpected and well ahead of the FED’s March 18 interest rate announcement. The move is still taking time for the market to digest the story as it is being seen as a precautionary measure to deal with the economic implications of the widely spreading economic impacts of the coronavirus.
The overall sentiment has turned around from last week’s covid-19 selloff after the USDCAD rose sharply to a new June 2019 high on Friday. The USD is down considerably against a basket of major currencies tracked in the US dollar index. The USD index has now consolidated to a new one month low as the EURUSD pair surged 3.82% in two weeks. G7 finance ministers and central bank governors held a conference call yesterday to outline how they can cooperate together to deal with the economic risks of a globally spreading coronavirus. The first central bank meeting to be held after last week’s panic selling with be the bank of Canada tomorrow. Now that the FED has cut rates ahead of the BoC meeting, it is widely expected that Canada will follow suite. USDCAD support stands at 1.3310 along with one year resistance of 1.3472. Expect less volatility now that an emergency rate cut has already been triggered and that the odds of a BoC cut are already priced into tomorrow’s meeting.