minus academy faq plus academy faq Check in circle Apple Android Home Magnifer Calculator Mail Email Facebook Twitter RSS Linkedin Linkedin hollower Headphones Wechats Instagram Line Mail 2 Phone Phone 2 Minus Plus Arrow right Arrow left (variant 2) Arrow right (variant 2) Brand logo Brand logo not filled Hamburger Flag of the Hong Kong Flag of the US/GB Flag of the US/GB Flag of the US/GB Flag of the China Flag of the China Flag of the China (traditional) Flag of the Taiwan Flag of the Hong Kong Flag of the Spain Flag of the Russia Flag of the France Flag of the German Flag of the Portugal Flag of the Italy Flag of the Poland Flag of the Czech Flag of the Hungary Flag of the Sweden Flag of the Bulgarian Flag of the Finland Flag of the Lithuania Flag of the Denmark Flag of the Croatia Flag of the Estonia Flag of the Norway Flag of the Romania Flag of the United Arab Emirates Flag of the United Arab Emirates Flag of the Indonesia Flag of the Malaysia Flag of the Korea Flag of the Korea Flag of the Samoa Flag of the Vietnam Flag of the Thailand Flag of the Japan Cross Cross large User Arrow down Arrow up Cube Info list Data comunication Clock Slash
Market Outlook
ZFX: Dovish?  Hawkish? Choppy dollar amid the FOMC outcome - ZFX

ZFX: Dovish?  Hawkish? Choppy dollar amid the FOMC outcome

17-09-2020 07:38

On Thursday, the European stocks are expected to open lower, following the counterparts in Asian markets earlier and the Wall Street overnight. Traders are digesting the latest guidance, hinting the policy stance, from the Fed meeting.

Of course, investors have already fully expected the low rates policy, however, the Fed still showed more to the market regarding the fed rate forecast (Dot Plot) inside the FOMC. FOMC members believed that the Fed may not have rate hike through the whole year of 2023, which is in line with pledging the low rates over the next few years.

The committees may just let the fed rate close to zero unless the inflation can stand at or be over 2% target for a period of time, and the labor market can reach “maximum employment”.

Meanwhile, the Fed assessment was a bit positive over the economic recovery in the US, pushing the rebound of the dollar and the Treasury yields. The dollar bounced against those major currencies, making dollar index back to 93 level. The benchmark 10-year US Treasury yield was up, touching 0.7% overnight.

Stocks in Asian markets were generally in a risk-off mode, mostly reacting to the overnight moves in the US trading session last night. Investors were not that optimistic after the news from FOMC.

ZFX analyst Jacob Leung said that the dollar clearly strengthened after FOMC meeting, implying three points. First, the investment market is more concerned about Powell’s comment on the economic outlook. Second, investors may have already fully anticipated all the information from Fed, causing a “buy the rumor sell the news” effect. Third, after eliminating the potential bearish of the dollar, risk aversion dominated again. The sell-off pressure in the stock markets may once again trigger the demand of the safe-haven.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.