FED has confirmed the “signal”… Cut Interest Rates!

FED verified traders’ expectations for cutting the interest rates (by 50bps) as a measure to contain the damage caused by the coronavirus impact. Fed Chairman Jerome Powell said that US economy is still strong and they don’t intend to take any additional actions except rate cuts. This move had a domino effect on worldwide markets.

KOSPI composite had a great run to the upside (+2.24%) as Lee Ju-yeol, Bank of Korea Governor announced that they take very seriously the FED’s move. NIKKEI remained neutral (+0.08%) while Shanghai Stock Exchange continues to grind higher (+0.63%) as Investors are speculating that China will announce measures to support their economy due to the coronavirus.

EU markets opened in green as most indices are trying to build a technical bottom near their lows. In regards to the EU economic data, the German Final Services PMI was changed to 52.5 in February from the estimated 53.3 for February 2020. Likewise, Eurozone Services PMI was updated to 52.6 from 52.8.

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15m charts

GER30M15 432020

UK100M15 432020

The US pre-trading session shows a higher open as yesterday, all major US indices recorded losses as they had already discounted the interest rates cut by FED. Talking about politics, US Vice President Joe Biden won 9 states and he has already become one of the main candidates for the presidential election in November. On the other hand, Bernie Sanders took 4 states and Michael Bloomberg just one.

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15m charts

SPX500M15 432020

NAS100M15 432020

Reviewing the bond markets, most 10-Year bonds are recording new lows as Traders anticipating further easing policy stimulus from the majority of central banks and governments. (US Bond 10Y reaches an all-time low,  German Bond 10Y hits 6 months low, Japan Bond 10Y hits  17 week low, France 10Y Bond 23 week low). Naturally, XAUUSD remains the big winner from the coronavirus outbreak as trades near 1635 an ounce. Yesterday it experienced a new high while its currently consolidating (potential Pennant formation in 15m). Heading to the USOil, its still moving sideways between 46 to 48 area.  On 5 and 5th of March, OPEC+ will have a meeting in Vienna. The market discounts a cut output as coronavirus has affected the total demand.

15m charts

USOilM15 432020

XAUUSDM15 432020

Today’s economic calendar includes the following news:

Canada – BoC Rate Statement

Canada – BoC Interest Rate Decision
Previous: 1.75%, Forecast: 1.25%

UnitedStates – ISM Non-Manufacturing PMI (Feb)
Previous: 55.5, Forecast: 53.835

Canada – BoC Press Conference


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