FED’S Daly Sparking Some USD Selling With Dovish Comments

The USD has been on a bullish footing during most of this week, even though the bullish momentum was not as strong. That’s the reason why we sold AUD/USD earlier on at the 100 SMA on the H1 chart. But, in the last few hours the USD has taken a hit and has lost around 40-50 cents. The unemployment claims came a bit higher than expected at 3,169K earlier on, which is still a massive number, but at least they are cooling off.

They weren’t too far away from expectations and we didn’t see much reaction back then. But, the USD started declining after FED’s Daly made some dovish comments, suggesting more monetary relief. This is bearish for the USD, but also means that the FED expects the shut-down to continue longer, which would be detrimental for the US economy. This is what has softened the USD in the last couple of hours.

 

  • FED has many tools left use
  • 2020 is going to be a negative for US GDP growth
  • US entered virus episode with strong economic momentum
  • Sees inflation being tepid, not reaching 2% goal for a while
  • FED committed to keeping rates in a supportive position
  • FED forward guidance, balance sheet can be stimulus sources
  • Pressures on inflation right now are downward, not upward

 

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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