Forex Today: Brexit, stimulus hopes prevail after a dovish Fed
|Here is what you need to know on Thursday, December 17:
Optimism pushed the dollar lower throughout the first half of the day. Hopes gyrated around a US stimulus package and a post-Brexit trade deal. The greenback turned temporarily higher with the US Federal Reserve decision, as US policymakers offered a wait-and-see stance, later resuming its decline as the central bank is clearly dovish in the long-term.
As widely anticipated, the US Federal Reserve kept the federal funds' target rate in a range of 0% to 0.25%. Policymakers are committed to supporting the economy until they see “substantial further progress” in employment and inflation.
US Congress leaders met on Tuesday to discuss government funding and a coronavirus aid package, and the meeting ended with Republican Senator Mitch McConnell saying, “we’re making significant progress.” Market talks suggested they are working on a $900B bill that would include a new round of stimulus checks, but it is not likely to include corporate liability provisions.
On the Brexit front, reports indicated that progress had been made, but there’s no breakthrough yet, according to German Chancellor Angela Merkel. According to Reuters, an EU official has said that fisheries remain the main obstacle. Also, some headlines indicated that the UK had accepted the idea of “managed divergence” to get access to the single market. That means that if UK standards fell short of EU ones, the Union has the right to retaliate.
Gold seesawed between gains and losses within the Fed’s announcement, ending the day with solid gains at $1,863.00 a troy ounce. Crude oil prices were also up as US crude inventories declined 3.1 million barrels last week. WTI settled at $48.00 a barrel.
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