Fed rate cut to 0%, USD drops in European session
The new coronavirus continues to ravage the world. Not only many cases were found in Europe such as Spain, the United Kingdom, and France, but also in the United States. US President Trump announced an emergency state last Friday and he said that 50 billion USD fund will be ready for the severe epidemic.
Before the market open this week, the Federal Reserve significantly reduced the fed fund rate from the target range of 1% – 1.25% to 0% – 0.25%, and also announced the implementation of quantitative easing (QE) on the scale of US $700 billion. The market sentiment has improved for a short time, but is still pessimistic. At the current European session, global stock markets are still gloomy.
In the forex market earlier seesion, the dollar fell against a range of currencies, but due to the risk aversion in market, investors buy back dollar. However, in European market, the euro and the yen rise obviously, reflecting safe-haven roles, and changes in interest rate differentials.