The U.S. dollar rebounded on Tuesday (March 10) as investors expected that further stimulus from global leaders will boost the economy. In particular, US President Trump will request Congress to cut the income taxes together with the other “significant” stimulus measures coming.
Generally, investors are uncertain about the details of the plan. Although market sentiment has stabilized, it is still quite vigilant. However, the fiscal stimulus package is relatively direct and effective for investor confidence or the business sector. It is undoubtedly that the dollar has gained support, while non-US currencies are generally under pressure.
Global stock markets have plummeted. After the Federal Reserve cut interest rate urgently a week ago, financial markets still expected that the Federal Reserve will cut interest rates further by at least 50 basis points next week after the FOMC meeting, which may weaken the dollar over other major currencies.
Of course financial markets also expect the European Central Bank to cut interest rates by 10 basis points on coming Thursday, but given that interest rates are already at 0% level, many investors believe that the European Central Bank has limited room for further rate cuts.
In addition, investors keep paying attention to the oil market. Russia stated on Tuesday that the possibility of joint measures with OPEC to stabilize the oil market could not be ruled out. Novak, the Energy Minister of Russia, stated on Wednesday (11th) that Russia will participate in the March OPEC + meeting and continue to communicate with OPEC. Oil prices rose in early trading session on Wednesday. However, Saudi Aramco reported that the company received a instruction from the Ministry of Energy requesting to increase its maximum sustainable production capacity by 13 million barrels per day. Oil price is now dropping back in European session.