Dovish Fed Keeps Driving the Dollar Down
Traders expecting Wednesday‘s FOMC meeting to reverse the dollar’s fortunes, received a rude awakening as a dovish policy statement continued to heap pressure on the USD.To get more news about
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With the economy showing little sign of recovery from the devastating Covid-19 driven recession that we currently find ourselves within, the Fed left interest rates at near zero levels and vowed to continue “acting as appropriate to support the economy.”
Jerome Powell also implored Congress to help stimulate the economy through supportive fiscal policy, but the ultrasensitive and divided US political landscape certainly doesnt help.
There‘s no way today’s FOMC statement can be viewed any way but as a dovish message to markets, with the Feds intention to maintain highly accommodative policy for “as long as it takes.”
Most likely were talking years here.
The actual July FOMC statement was little changed from June, but did feature the following addition: “The path of the economy will depend significantly on the course of the virus.”
The irony of the Fed speaking about there being no tradeoff between the US economy and public health on the same day that the countrys Covid-19 death toll ticked above 150,000, is not lost on me.
A devastating milestone that looks nowhere near a top, with California, Texas and Florida all also reporting record numbers of daily deaths.
“Even if the reopening goes well and many, many people go back to work, it is still going to take a fairly long time for parts of the economy that involve lots of people getting together in close proximity” said Powell in his accompanying, socially distanced, virtual press conference.With markets becoming increasingly addicted to stimulus, we know support means free money and as you can see below, the markets reacted accordingly.
The US Dollar Index (DXY) remains under pressure, reaching support not tested since 2018.
