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US dollar falls as Fed shocks markets with an emergency rate cut

business-articlesUS dollar falls as Fed shocks markets with an emergency rate cut
  • US dollar slides after rate cut
  • Pound edges higher before services PMI
  • Euro struggles to find momentum

Fed issues surprise rate cut

The US dollar weakened on Tuesday in response to the Federal Reserve’s surprise announcement that it would be implementing an emergency rate cut to help protect America’s economy against the coronavirus.
 
In an unscheduled move, coming two weeks before its next official policy meeting, the Fed cut interest rates by 50 basis points.
 
The US dollar will remain in focus today as markets look to assess the impact of yesterday’s Fed rate cut.

Also set to influence USD exchange rates will be the publication of the latest ISM non-manufacturing PMI, where a robust performance by the US service sector last month could offer some support to the US dollar.

UK construction sector returns to growth

The pound ticked higher yesterday, buoyed by a surprisingly strong construction PMI and some words of confidence from Bank of England (BoE) Governor Mark Carney.
 
Today the focus for GBP investors will be on the UK’s latest services PMI, with the pound likely to strengthen if it confirms growth in the vital service sector remained robust last month.
 
Euro undermined by inflation data

The euro struggled to find momentum on Tuesday as it was undermined by a fall in Eurozone inflation and concerns Germany’s fiscal response to the coronavirus may be limited in scope.
 
However, the euro could advance today if the Eurozone’s latest retail sales figures show a rebound in growth.


 
Upcoming Data:

Wednesday 4th March

09:30    GBP Markit/CIPS UK Services PMI (Feb)
10:00    EUR Retail Sales (JAN) 
10:00    USD Markit Composite PMI 
 
 
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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