Fed: Interest rate relief speculations to support stocks

The Federal Reserve kept its economic relief programs and the fed funds rate unchanged as expected. Dollar and Treasury rates fall, equities rise, erasing the pandemic loss, and this trend is expected to continue while the US economy is unable to show a robust recovery, FXStreet’s analyst Joseph Trevisani briefs.

Key quotes

“The Federal Reserve kept its policy and rate matrix unchanged at the July meeting while Chairman Powell warned that a slowing economy would require support for the foreseeable future.”

“Chairman Powell said that high-frequency data such as credit card purchases, travel, restaurants visits and the like suggested that the  US economy began to slow after virus cases began to accumulate in early June though whether that would continue is uncertain. The FOMC statement and Mr. Powell noted that progress on the economy is closely linked to the control of the virus. ‘A full recovery is unlikely until people believe it is safe to undertake a full range of activity,’ said the Chairman.”

“The Fed is fully engaged in the fight against the economic weakness stemming from the Covid pandemic and though the Chairman did not directly mention expanding its rate impact to the longer end of the yield curve, its commitment to providing as much support as possible leads in that direction.”

“As long as the US economy fails to achieve a robust self-sustaining recovery, whatever the reason, speculation on lower rates will continue to support stocks and bond prices and weaken the dollar.”


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Latest Forex News

Editors’ Picks

AUD/USD weaker ahead of RBA’s monetary policy decision

The Aussie is weak, despite receding dollar’s demand and the robust performance of US indexes. Coronavirus developments hit the commodity-linked currency ahead of the RBA.


Gold: This just might be as good as it gets for gold

The price of gold is trading at $1,975 within a range of between $1,960.54 and $1,986.76 at the time of writing, virtually flat on the day in consolidation having eeked out a fresh all-time high.

Gold News

USD/JPY struggling to retain the 106.00 level

The USD/JPY pair traded as high as 106.46 on Monday but struggles to retain gains above the 106.00 level amid lack of dollar’s demand.


Ethereum on its way to regaining $400 while BNB hit a new high at $22.5

BTC/USD is more stable than other coins right now but has been able to recover from its crash towards $10,500. It is currently trading at $11,369 and faces very little resistance until $14,000.

Read more

WTI drops below $40 on demand worries, OPEC+ output increase

Crude oil prices posted losses last week and seem to be struggling to shake off the bearish pressure on Monday. As of writing, the barrel of West Texas Intermediate (WTI) was trading at $39.85, losing 1.5% on a daily basis.

Oil News