Emergency FED rate cut
USD fell across the board on Tuesday, as the Federal Reserve announced a sudden interest rate cut in an attempt to protect the US economy from the economic fallout caused by the coronavirus.
The Fed voted unanimously in lowering the interest rate by 50 basis points, with the first emergency cut since the financial crisis. According to the statement, despite the US economy remaining strong, the coronavirus outbreak poses evolving risks.
In a short speech following the announcement, Fed Chair, Jerome Powell, acknowledged that the outbreak would weigh on the economy for some time and that the risks to the US economic outlook had changed materially prompting the Fed to act.
Losses in USD were capped as markets had anticipated a cut this month following Powell’s comments on Friday.
Money markets are now pricing a 50% probability of an additional 25bp cut by the Fed this month and a UK interest rate cut of 25bp at 100%.
USD – 15.00: ISM Non-Manufacturing PMI (FEB) consensus 54.9 previous 55.5.
GBP – 18:00: BOE Broadbent speech.
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