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NZ FinMin says RBNZ Required to Consider Impact of Housing for Monetary Policy, NZD Soars

Real Time News
  • RBNZ Governor Orr says change to remit to consider home prices is welcome - DJ via BBG
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: France 40: 0.21% Germany 30: 0.20% Wall Street: 0.00% US 500: -0.01% FTSE 100: -0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/vQypZV7j1L
  • NZD extending gains against the Dollar $NZD $USD https://t.co/T6NsjMXiN9
  • New Zealand government changes RBNZ remit to take account of housing market in decisions. Kiwi extending gains $NZD $NZDUSD
  • This is an update to an article published on February 1, looking at CAD potential against the US Dollar (USD/CAD), the Euro (EUR/CAD) and the Japanese Yen (JPY). Get your $USDCAD market update from @JStanleyFX here:https://t.co/erp4Qddlvm https://t.co/pJ5zJ1cSWz
  • #Gold Price Outlook: Gold Recovery First Test at Trend Resistance - $XAUUSD Levels - https://t.co/VHAsch23R0 https://t.co/9nnskcEVxQ
  • The US 10Y yield sits at 1.39, slightly off its intraday high of 1.43 https://t.co/a7mvDvlBiG
  • Bitcoin trying to turn it green on the. Yellen thinking 'time to sweep the leg'
  • commodity currencies have been putting in big moves of late. $USDCAD fresh two-year-lows, nearing 1.2500. But $CADJPY has been in a pronounced breakout for a little longer, and $EURCAD has recently joined the party. https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/02/24/Canadian-Dollar-Price-Forecast-Loonie-USD-CAD-USDCAD-CAD-JPY-CADJPY-EUR-CAD-EURCAD.html https://t.co/GQeIBjPmpH https://t.co/21VFUWPXv7
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Silver: 0.60% Oil - US Crude: -0.05% Gold: -0.37% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/OVvBvd24Qj
How Gold, Oil, Stocks & USD Perform After FOMC Rate Cuts Start

How Gold, Oil, Stocks & USD Perform After FOMC Rate Cuts Start

Rich Dvorak, Analyst

FEDERAL RESERVE RATE CUT CYCLES & MARKET PERFORMANCE – SUMMARY POINTS:

  • The Federal Reserve is expected to announce its second interest rate cut this year and stands to confirm the central bank’s shift toward increasingly dovish monetary policy
  • FOMC rate cuts have historically produced mixed returns across assets like gold, crude oil, the S&P 500 and US Dollar
  • Check out our free educational guide discussing strategies behind Trading Forex News

The Federal Reserve is slated to deliver its latest monetary policy update Wednesday at 18:00 GMT. Markets widely anticipate the FOMC to cut its benchmark interest rate by 0.25% as central banks around the world loosen financial conditions. Dovish action by the Fed and other central banks have primarily sought to combat signs of economic weakness and sustain the current expansion in light of staggering risks that stem largely from the US-China trade war and rising geopolitical instability.

On that note, the July Fed meeting revealed the FOMC’s first interest rate cut in over a decade. The move came subsequent to a dramatic shift in the Federal Reserve’s language and forward guidance compared to this time last year. In fact, the median estimate for the 2019 federal funds rate (FFR) was previously listed as 3.1% according to the September 2018 economic projections provided by Fed members, while the most recent forecast provided this past June sees the FFR at 2.4%. Yet, the current target federal funds rate range sits at 2.00-2.25%.

IS THE FED ENTERING A CYCLE OF INTEREST RATE CUTS?

The Federal Reserve’s stated dual mandate that governs the central bank’s decisions encompasses price stability and full employment. While the downside risks chiefly contributing to slowing global GDP growth remain unresolved, the potential that economic fundamentals deteriorate further cannot be discounted and may encourage additional interest rate cuts down the road – regardless of what Wednesday’s FOMC decision reveals.

Correspondingly, with inflation continuing to run below the Fed’s target amid fermenting recession fears induced by the recent US Treasury yield curve inversion, the central bank will likely press onward by lowering borrowing costs in hopes of incentivizing consumption and business investment. That said, another Fed rate cut could suggest the scale is tipping away from a “mid-cycle adjustment” in lieu of a full-blown series of accommodative policy measures. Alas, in a sequel to our original analysis on stock market returns when the Fed cuts rates, the tables and graphs below detail how various assets like gold, crude oil, the S&P 500 and US Dollar have historically performed when the Fed enters a cycle of interest rate cuts.

GOLD PRICE RETURNS WHEN THE FED CUTS RATES

Gold Price Returns During Fed Rate Cut ChartHow Gold, Oil, Stocks & USD Perform After FOMC Rate Cuts Start

CRUDE OIL PRICE RETURNS WHEN THE FED CUTS RATES

Oil Price Returns During Fed Rate Cut ChartFOMC Rate Cut and Oil Price Performance Chart

S&P 500 INDEX RETURNS WHEN THE FED CUTS RATES

Stock Price Returns When Fed Cuts Rates TableFOMC Rate Cut and S&P 500 Index Performance Chart

DXY US DOLLAR INDEX RETURNS WHEN THE FED CUTS RATES

US Dollar price returns during Fed rate cut tableFOMC Rate Cut and US Dollar Index Performance Chart

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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