Moody's says Fed rate cuts may fall short of stabilizing markets

Ross J Burland FXStreet

Moody's says a Fed rate cut may fall short of stabilizing markets.

Key notes

Moody's says Covid-19 poses downside risk to US economy, & though there are limits to monetary policy, the Federal Reserve may need to step in.
Moody's says if financial market conditions continue to tighten, odds of rate cut will increase.
27 Moody's says previous assumption that coronavirus will be contained to china proved optimistic, and odds of a pandemic are rising.
Moody's says previously put odds of Covid-19 pandemic at 20%, but now put them at 40%.
Moody's says coronavirus pandemic will result in global and u.s. recessions during first half of this year.

FX implications

Such a move by the Fed would make the carry in CAD more attractive. More on that here. Meanwhile, the CME Group FedWatch shows a 72% probability of a rate cut in March.

DXY: Markets pricing in a Fed rate cut although a EUR/USD correction is on the cards

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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