US equities recovered yesterday, despite the number of cases and deaths related to the coronavirus having again risen significantly, with the S&P 500 up 1%. However, the Dollar has been broadly stable in the past 24 hours, failing to benefit from the release of strong US durable goods and consumer confidence data.
This is often the case ahead of Fed policy meetings, particularly when markets expect few surprises. Indeed the broad consensus forecast is that the Fed will leave its policy rate unchanged and reiterate that the US economy is in a good place and therefore that the current policy rate is appropriate. Nevertheless the expectation is that Chairperson Powell will have to address the recent rapid fall in US government bond yields and
markets’ pricing of 31bp of Fed rate cuts in 2020.
Beyond US shores, the Euro has been broadly stable while the Kiwi Dollar and Sterling have posted very small losses. The Australian Dollar is down a more pronounced 0.3% to its weakest level in over a decade in trade-weighted terms, despite the release this morning of slightly higher than expected Australian CPI-inflation data for Q4.
