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Weekly Roundup: Surprise Fed interest rate cut weighs heavily on US dollar

currency-newsWeekly Roundup: Surprise Fed interest rate cut weighs heavily on US dollar
The Federal Reserve’s decision to cut interest rates in an emergency move left the US dollar on a generally weaker footing, having caught markets by surprise.

Doubts that the Fed’s move will be enough to shield the US economy from the fallout of Covid-19 kept USD exchange rates on the back foot.

After January’s personal consumption expenditure reading fell short of forecast this limited the appeal of the US dollar, given that the measure remains the Fed’s preferred gauge of inflation.

With the world’s largest economy still showing signs of softness in the face of global trade weakness the potential for US dollar gains diminished.

As forecasts point towards a contraction in January’s monthly factory orders reading the mood towards the US dollar could sour further over the course of the week.

Friday’s non-farm payrolls report may also weigh on USD exchange rates unless the labour market can demonstrate signs of tightening.

Without evidence of underlying growth momentum within the US economy the US dollar may struggle to find any particular traction in the near term.
 
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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