Earlier gains turned to losses
The dollar continues to weaken. Looking at the % changes of the major currencies vs each other and ranking the cumulative % changes, the USD is the second weakest of the majors (behind the CHF).
Looking at the snapshot of the major pairs vs the USD, most of the pairs are trading at extreme levels. The exception being the USDCHF. The EURUSD is also still off it’s highs for the day by 5 or so pips.
The FOMC meeting minutes will be released at the top of the hour. At the meeting the FOMC was more dovish:
- They cut the estimate for hikes from 2 to 0 in 2019
- They are looking for a single rise in 2020.
- They cut GDP growth in 2019 to 2.1% from 2.3% and 2020 growth to 1.9% from 2.0% in December
- They also lowered PCE inflation to 1.8% from 1.9% and 2020 inflation to 2.0% from 2.1% in December.
- They raised 2019 unemployment rate to 3.7% from 3.5% in December and the 2020 rate to 3.8% from 3.6%
Despite that softer view, Fed’s Powell did say the US economy was in a good place and that the goal is to sustain expansion. He spoke positively that it is a “great time for the Fed to be patient, watch and wait” and that data is not indicating “a move in one direction or another” (hence the 0 hikes in 2019). The Fed is clearly on the sidelines and the market started to think about the potential for a cut as well (despite the expectations for 1 hike in 2020.