USD/JPY drops over 1% as Fed slashes rates to zero

In what has been a coordinated effort by a number of central bankers to ensure dollar liquidity in the banks, as part of a wide-ranging emergency intervention, the Federal Reserve slashed rates to zero on Sunday sending the US dollar broadly lower and USD/JPY to a low of 106.44 in a bearish gap. At the time of writing, USD/JPY is trading at 106.73, off the 106.44 low from a high of 107.24, -1.14%. 

The Washington Post reported that, "the Federal Reserve made an emergency interest rate cut to zero on Sunday, a dramatic step meant to make borrowing as cheap as possible for American households and businesses as the coronavirus brings the US economy to a near standstill."

This has taken the benchmark US interest rate into a range of between 0 to 0.25 percent, effectively taking interest rates to zero with and appeasing US President Donald Trump who tweeted his feelings shortly after the news was made public, saying that he rate cut makes him very happy.

• Says congratulates federal reserve, thinks action is 'terrific'
• Says Fed purchase of US treasuries and mortgage-backed securities is 'very good news'.

QE here we go

The Washington Post also reported that the Fed announced it is re-starting “quantitative easing". "The actions came as the economy was hurtling toward a recession as the coronavirus outbreak shut down wide swaths of U.S. society. The Fed vowed Sunday to “use its full range of tools” to support the economy and the “smooth functioning of markets.”

"In the coming months, the Fed will purchase at least $700 billion more in bonds as part of its new quantitative easing. The majority of that, at least $500 billion, will be US Treasury bonds."

USD/JPY levels