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Dow Jones Rises, USD Drops as Fed Announce Unlimited QE

Dow Jones Rises, USD Drops as Fed Announce Unlimited QE

Justin McQueen, Strategist

US Dollar Analysis & News

  • Fed Announces Unlimited QE
  • Dow Jones Jumps into Positive Territory
  • US Dollar Eases

Dow Jones Rises, US Dollar Dips as Fed Announce Unlimited QE

This morning the Federal Reserve have announced a fresh set of stimulus measures in which they will purchase mortgage backed securities (MBS) and Treasuries in unlimited size (open-ended QE) in order to smooth market functioning. As reminder, the Federal Reserve stated last week that they would purchase a minimum $500bln of treasuries and $200bln of MBS.

Alongside this, in order to support the flow credit to employers, consumers and businesses the Federal Reserve will provide as much as $300bln in new financing as the spread of the coronavirus puts the US economy at risk of a sharp recession.

Market reaction: Following the announcement by the Federal Reserve, US equities jumped, with the Dow Jones futures trading in positive territory for the session (at the time of writing), while gold broke above $1500, hitting a high of $1523. Across currency markets, the US Dollar dipped by 102 before partially paring the initial move love.

That said, this latest announcement adds to a long list of unprecedented measures already taken by the Federal Reserve. Actions so far

  • Fed Funds Rate Cut to 0%
  • QE Relaunched at $700bln
  • Repo Program Announced of $1.5tln, followed by a $1tln daily repo program
  • Fed to purchase commercial paper
  • USD Swap Lines Announced

Dow Jones Price Chart: 1-Minute Chart

Dow Jones Rises, USD Drops as Fed Announce Unlimited QE

Source: IG Charts

US Dollar Price Chart: 1-Minute Chart

Dow Jones Rises, USD Drops as Fed Announce Unlimited QE

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

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