Greenback and Treasury Yields Tumble As Fed Abandons Policy Tightening Plans

Greenback and Treasury Yields Tumble As Fed Abandons Policy Tightening Plans


The dollar index which measures the greenback against a basket of major currencies plunged to a six-week low of 95.74 following the Federal Reserve policy meeting. Interest rates were left unchanged, and the dot plot signaled that interest rates would remain at current levels in 2019 and only could examine one hike in 2020. Moreover, the Fed intends to slow balance sheet run-off starting in May and ending in September if the economy evolves as expected. The drop in economic activity during the fourth quarter of 2018 forced the fed to drop further tightening measures. GDP expectations for 2019 were downgraded to 2.1% from 2.3% prior. The US Treasury yields dived with 10-year yields falling to a fourteen-month low of 2.509%, the EURUSD rose to a six-week high of $1.1448, and the USDJPY tumbled to a three-week low of 110.32.


Major US indices drifted lower on Fed's dovish tone and Trump's comments over trade between China and the United States. The ongoing economic slowdown forced the Fed to rule out raising interest rates in 2019 and downgraded the economic growth forecasts. On the other hand, president Donald Trump stated that the current US tariffs on Chinese imports could stay on for a substantial period of time. The Dow Jones Industrial Average futures fell to a low of 25637, the S&P500 futures declined to a low of 2818, while Nasdaq settled higher at 7371.


Precious metals prices edged higher as the dollar and treasury yields weakened following Fed policy meeting. The gold ounce rose to a three-week high of $1320, the silver ounce traded at a high of $15.62, and Palladium jumped to a fresh record high of $1615.


Oil prices soared supported by OPEC+ led supply cuts and a drop in US oil inventories. The US Energy Information Administration reported that the US weekly crude oil inventories dropped by 9.589 million barrels to 439.5 million barrels last week. The West Texas Intermediate crude futures traded at a four-month high of $60.31, and Brent futures advanced to a high of $68.67.

Major Economic Events

GMT Country Event Expectation Previous
8:30 CH SNB Interest Rate Decision -0.75% -0.75%
9:00 CH SNB Press Conference    
9:30 UK Retail Sales (MoM) (Feb) -0.4% 1.0%
Tentative EU EU Leaders Summit    
12:00 UK BoE Interest Rate Decision (Mar) 0.75% 0.75%
12:00 UK BoE QE Total (Mar) 435 435
12:30 US Philadelphia Fed Manufacturing Index (Mar) 4.6 -4.1
12:30 US Initial Jobless Claims 226 229


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