The euro slumped on Thursday following the European Central Bank’s (ECB) latest interest rate decision.
As part of an emergency measures to help shore up markets and protect the US economy from the economic impact of the coronavirus, the Fed made the decision to slash rates by 50 basis points on Tuesday.
The cut, coming two weeks before its next official meeting sent shockwaves through currency markets and triggered the start of what would become a significant sell-off of the US dollar.
This plunge in USD exchange rates through the latter half of the week was mostly fueled by expectations of additional Fed cuts, with CME’s FedWatch tool predicting the US central bank could target a 1% rate cut when policy makers hold their next meeting on 18 March.
Not even a stellar US payroll report on Friday was able to revive the US dollar’s fortunes, with USD investors shrugging off a bumper increase of 273,000.
Looking to the week ahead we suspect the US dollar will continue to be met by resistance amidst the expectation for deep rate cuts from the Fed.
This will also see investors largely ignore US economic data this week, with a robust inflation reading unlikely to inspire much upside in USD exchange rates.
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)