Fed’s policy confusion sends Dow & USD packing, first photos inside meeting released

March 21, 2019

Well, the Fed has done it again. They have managed to confound markets after their latest monetary policy meeting.

USD-paired currencies went off to the races overnight as the dollar weakened. The EURUSD opened at $1.13499 and was virtually without a pulse for most of the day, dipping to lows of $1.13344 mid-session. Then the Fed showed up. The dovish tone of the policymakers sent the USD down, meaning the euro had a huge spike, peaking at $1.14475. It has come off those highs and is currently trading at $1.14271. The pound was able to capitalise on the Fed meeting, but Brexit concerns outweighed any gains. The GBPUSD opened at $1.32652 and bumped up to a high of $1.32727 shortly after opening. The decline set in a short time later, with the pair sinking on the back of the news that Theresa May will seek an extension to the Brexit deadline. It hit lows of $1.31446 heading into late trading before a rally saw it go as high as $1.32491. It gave up some of those gains and is currently trading at $1.32015.

The Fed’s tone was so dovish that some people wonder if the meeting itself resembled a bird avery. This sent US stocks down as it is seen as a lack of confidence in the nation while some pundits wonder whether there are underlying economic weaknesses that the broader public don’t yet know about. The Dow bore the brunt of the flock of doves that is the Fed Reserve after opening at 25,886.51. The index then climbed early, hitting highs of 25,943.92 heading into mid-session trading. It tumbled from that high in the lead-up to the meeting, falling to 25,678.71 before the conclusion of the meeting sending the Dow surging to near-highs of 25,938.26. However, those gains were quickly given up as the Dow sunk to lows of 25,669.01 a short time later. It has come off those lows and is currently trading at 25,729.76. The Dax had problems of its own, weighed down by the Brexit chaos as-well-as the falling Dow. The German index opened at 11,697.42 and lifted to an early high of 11,722.85. The rot set in after that, with the Dax falling sharply, then steadying for a few hours before finally succumbing to a falling Dow. The Dax hit lows of 11,570.70 and finally closed at 11,575.04.

The day ahead is packed with crucial data, headlined by the BoE’s interest rate meeting. While rates are not expected to change, the language used by Governor Mark Carney will be vital to listen to. This will give markets guidance and an insight into the central bank’s thinking when it comes to economic outlook and monetary policy settings.

Other data released today includes:

NZ – Credit Card Spending

Australia – Employment Change, Unemployment Rate, RBA Bulletin

Canada – ADP Non-Farm Employment Change, Wholesale Sales

US – Philly Fed manufacturing Index, Unemployment Claims, CB Leading Index, Natural Gas Storage

UK – BoE Official Bank Rate, Monetary Policy Summary and Asset Purchase Facility, Retail Sales, Public Sector Net Borrowing

Europe – EU Economic Summit, ECB Economic Bulletin, Swiss Libor Rate, SNB Monetary Policy Assessment & Press Conference

 

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