Surprise Fed meeting shocks markets
An unscheduled Fed meeting was held overnight, causing markets to tumble.
The EURUSD made some small gains overnight, taking a break from the rallies that have occurred over the last few days. The pair opened at $1.11327 and was flat early, before slipping to lows of $1.10946 mid-session. It rebounded off those lows and climbed to highs of $1.12133 a couple of hours later. It came off those highs late in the day and is now trading at $1.11699. The GBPUSD bounced back to life overnight after its recent struggles. It started the day at $1.27515 and dipped to lows of $1.27396 in the opening hour in what looked like a continuation of the sell-off that started late in the previous session. However, it bounced off those lows and ascended to a high of $1.28437 late in the day. It has come off those highs slightly and is now trading at $1.28224.
The Dow was steady for most of the day until the Fed stepped in. The index began the day at 26,597.60 and traded in a tight range for most of the day before rallying to a high of 27,073.83 late. The Fed Reserve held and emergency meeting where they cut interest rates by 0.5%. Their intention was to send a signal that the Fed is there to support the economy but it sparked panic selling as investors took the view that the economy is more vulnerable than what was previously believed. The Dow was sent packing from this point as it crashed to a low of 25,693.63. It has come off those lows as banks looked forward to cheaper money being made available. The Dow is currently trading at 26,103.00. The Dax was spooked by the falling Dow, following suit and selling off late. The German index opened at 12,051.13 and fell to 11,845.50 early before rebounding and rallying to a high of 12,267.52 late in the day. The sell-off kicked in shortly afterwards as the Dax plummeted to lows of 11,730.72. It has come off those lows and is is now trading at 11,918.91.
The day ahead sees the publication of a raft of data. However, this seems to be taking a back seat to news surrounding the coronavirus as markets look to see if there are any new breakouts or advancements in finding a vaccine/cure.
Data published today includes:
China – Caixin Services PMI
UK – Final Services PMI, MPC Member Andy Haldane speaks
Canada – Labour Productivity, Overnight Rate and BoC Rate Statement
Europe – European, German and French Final Services PMIs, Italian & Spanish Services PMIs, European & German Retail Sales, Swiss CPI
US – ISM Non-Manufacturing PMI, ADP Non-Farm Employment Change, Final Services PMI, Crude Oil Inventories, Beige Book
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