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Relief after Fed's chief Powell speech

14 May 2020

On Wednesday, the U.S dollar traded higher against most currencies after the Fed’s chief Powell speech and by high demand. The USD was pushed higher by investors after Federal Reserve Chair Jerome Powell reassured that the negative interest rate as a mean to stimulate the economy is out of the question.

Moreover, the U.S dollar edged higher due to the high demand for the safe havens as financial markets still uncertain about the economic impact of the pandemic.

The U.S. Dollar Index, which measures the power of the Greenback against a basket of six major currencies, ended Wednesday’s trading session at 100.20.

In Europe, the single currency dropped against the U.S. dollar after data showed that the Industrial Production fell by 11.3 percent month-on-month. Moreover, the EUR is under pressure as investors are cautiously waiting for Eurozone GDP data, but mainly Germany’s GDP on Thursday. Investors are hoping that Germany's GDP will be as expected to boost the Euro; as Germany considered the largest economy in Europe. EURUSD ended Wednesday’s session at 1.08189.

Furthermore, the British pound continued its decline against the U.S dollar for the third day after data showed that UK’s GDP fell by 5.8% in March and the Industrial Production fell by 8.2%.

In addition, the Sterling remained under pressure as investors are worried that the government will have to increase taxes to cover its deficit especially after extending its job retention scheme, which is paying 80% of most workers’ wages for another four months and it will cost billions to fund this scheme. The GBPUSD ended the session at 1.22365.

In the Safe-havens area, the Swiss Franc lost against the U.S. dollar as traders are waiting for Switzerland’s Producer Price Index data on Thursday. The USDCHF ended the session at 0.97221 USDCHF. Likewise, the Japanese Yen ended the session slightly lower against the U.S. dollar at 107.027 USDJPY.

Gold prices closed higher for the second day after U.S. Federal Reserve Chairman Jerome Powell announced more stimulus measures. Gold considered a hedge against inflation and with the increase of stimulus in the future, inflation could increase too. Gold closed at 1715.57 on Wednesday,

In Canada, despite the slight increase in oil prices, the Loonie fell against the Greenback and the USDCAD ended the session at 1.40996.

In Australia, the Aussie dollar lost against the U.S dollar for the third day after Wage Price Index data came as expected at 0.5% and also after China banned meat imports from four Aussie processors. The AUDUSD ended the session at 0.64551.

Cryptocurrencies traded higher on Wednesday, Bitcoin closed the session higher at 9282.28 BTCUSD. Litecoin and Ethereum ended the session flat at 40.85LTCUSD and 195.74 ETHUSD, respectively.



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