Global stock markets are back on the rise as the situation has stabilized after the volatile swings seen yesterday when the Fed cut rates by 0.50%.
➡️ The US Federal Reserve announced yesterday that it would cut its overnight rate by 0.50% from 5.50% to 5.00%. This was the Fed's first rate cut in four years. Most analysts expected this, although a strong majority thought the Fed would be more cautious and cut by only 0.25%. The move is seen as a signal from the Fed that the fight against inflation, which has dominated US monetary policy in recent years, has been won. The Fed also signaled that it would likely cut rates by another 0.50% before the start of 2025, in line with the more dovish side of market expectations. Despite the very dovish Fed, there was a strong backlash against the initial wave of risk assets, but most risk assets are now moving in a positive direction.
➡️ Global stock markets are rising almost everywhere. The S&P 500 Index It traded at a new all-time high after the Fed statement, but ended the day lower. However, it is moving higher again and could attract trend traders on the long side if it closes strongly bullish today. Day traders may want to look for long trades today in this index.
➡️ Gold It briefly traded at a new all-time high above $ 2,600 after the Fed rate cut and is now rebounding after reversing during the Asian session. Trend traders will be interested in being long on gold.
➡️ In the Forex market, the Australian dollar was the strongest major currency since the Tokyo open today, while the Japanese yen was the weakest, in line with the risk on/off paradigm. The Japanese yen has been strong lately, but has been hit by improving risk sentiment, so it seems that the yen has been acting more like a safe haven than a strong currency in itself. However, the Bank of Japan is meeting tomorrow and could send a message that can influence the market perception of the yen and cause another change in price direction.
➡️ It is very interesting that it is the USD/JPY currency pair that the 2-year U.S. Treasury yield did not hit new lows after the Fed rate cut, as one might expect. This indicates an oversold situation in these assets, which may indicate that trend traders should consider exiting these trades.
➡️ The Bank of England will hold a policy meeting today. It is expected to leave its key interest rate unchanged at 5.00%.
➡️ U.S. unemployment claims data will be released later today.
➡️ The Bank of Japan will hold a policy meeting tomorrow. It is expected to leave its benchmark rate unchanged at 0.25%.
Credit by DailyForex.com
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