During the FED meeting policymakers are expected to keep their promise to do whatever it takes to support the world’s largest economy.
What no one is expecting from Fed policymakers at this meeting is a detailed forecast for the economy. The Federal Reserve will probably lift the interest rates that influence its fed funds target. This is a technical move that could keep interbank lending running smoothly. Fed officials have said they oppose negative rates for the United States. They have had mixed results overseas.
Investors do not expect further interest rate easing when the Fed’s monetary policy committee meeting ends on Wednesday.
Fears there could be a resurgence of infections over the coming months are a headache for the Fed as it seeks to estimate the swiftness of the economic recovery.
Stocks surged after Gilead Sciences reported an encouraging update on a potential treatment for the novel coronavirus. Gilead’s experimental antiviral drug helped improve symptoms in COVID-19 patients who were given the drug early.
The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession. Data showed that the U.S. economy contracted in the first quarter. The gross domestic product fell at a 4.8% annualized rate in the January-to-March period after expanding at a 2.1% rate in the final three months of 2019. The decline in gross domestic product (GDP) reflected a plunge in economic activity in the last two weeks of March.
Some European countries set out plans to ease lockdown measures in the past few days, boosting market optimism about an economic recovery.
The UK and EU have restarted Brexit negotiations via teleconferencing, but talks have reached an impasse, according to Brussels officials.
Next week, the BoE faces the nearly impossible task of putting numbers on the scale of the coronavirus recession.
START TRADINGForex – FED meeting under the spotlight
Optimism grows that businesses globally are getting closer to reopening and boosts risk appetite. A public holiday in Japan and caution ahead of the U.S. FED meeting kept currency markets subdued.
The dollar fell as stocks surged after Gilead Sciences reported an encouraging update on a potential treatment for the novel coronavirus. The greenback fell 0.26% against a basket of currencies to 99.62, above a two-week low of 99.44 hit on Tuesday. The US currency also dipped after data showed that the U.S. economy contracted in the first quarter.
The euro gained 0.43% to $1.0865 before a European Central Bank meeting on Thursday.
The Australian dollar, which is seen as a proxy for global growth, jumped 0.57% to $0.6527. It earlier reached $0.6547, the highest since March 10.
The New Zealand dollar rose by 0.6% to a two-week high $0.6119.
Sterling recovered versus the dollar but remained down against the euro on Wednesday. Britain showed no signs of easing its coronavirus lockdown, even as other European countries laid out plans to re-open their economies.
Cable fell to a low of $1.2391, before recovering to $1.2423, broadly flat on the day. The dollar fell when Gilead Sciences reported an encouraging update on a potential treatment for the coronavirus.
Against the euro, the pound fell around half a percent, to 87.545 pence.
Oil prices jumped on Wednesday after U.S. stockpiles rose less than expected and gasoline stocks fell.
June Brent crude futures were up 11.88%, or $2.43, at $22.89 a barrel by 1340 GMT. The more active July Brent crude contract added $1.83, or 8.05%, to $24.57. U.S. WTI crude futures rose 24.31% or $3, to $15.34.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money