- Fed cuts rates to zero, US dollar was broadly offered and US futures were limit down.
- Markets will now look to euroland for clues.
EUR/USD has found some support on the back of the surprise rate cut in the central bank’s bid to prevent financial market instability and buffer the global economy in the face of the spread of the Coronavirus. At the time of writing, EUR/USD is trading between 1.1065 and 1.1199, higher by 0.58% at 1.1168 during the time of writing.
EUR/USD flew from the lows at the start of the day on the news that the fed funds target range was cut by 100 basis points to 0%-0.25% with the strapline of the outbreak “has harmed communities and disrupted economic activity in many countries, including the United States.” At the same time, the Fed has announced a $700 billion asset purchase program that will buy $500 billion in Treasuries and $200 billion in mortgage-backed securities over the coming months.
The US dollar was broadly offered and US futures were limit down with the Dow futures losing over 1000 points, wiping out Friday’s record rally where stocks climbed more than 9% on Wall Street Friday, recouping most of their 10% plunge the previous day. Australian shares sank and Japanese equities futures were also down more than 5%, while oil resumed declines.
Eyes on euroland leaders
Wha we are seeing now are wild swings in the market in thin liquidity which has enabled the dollar to recover some ground. EUR/USD has dropped from 1.1199 but some 60 pips. What markets will now look for is some unity from the Europan leaders, but that is usually hard to come by so the euro could struggle from here at the start of this week. More on that here: What you need to know for markets opening: Europe on lock-down, risk-off firmly back on the agenda
EUR/USD levels
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