A Dovish Fed Sends The US Dollar Lower And Stocks Higher

A dovish Fed sends the dollar even lower, signaling no intention to taper asset purchases anytime soon.

The Fed said yesterday that it has no intentions of tapering asset purchases any time soon. And to ensure investors get the message, it even hinted that it isn’t even thinking about tapering.

Financial markets liked what the Fed said, and the US dollar took another leg lower, which should be good for stocks. The EUR/USD rose to 1.2150 from 1.17 only a few weeks earlier, and stocks bounced on the Fed’s message, but not by as much as the message would have implied.

The Dow, the S&P 500, and the Nasdaq 100 indices remain close to all-time highs. Apple and Facebook reported much better-than-expected earnings, further fueling the bid behind the bullish sentiment that’s pushing stocks.

Since the European and UK stock markets still suffer from strong currencies against the dollar, their stock markets have had a hard time advancing. Nevertheless, the indices are close to their recent highs.

It is all about commodities these days. From copper to lumber and iron, commodities are sharply higher, with no end in sight.

Daily Analysis

Today and tomorrow are key days as the trading month ends, and the Advance GDP data will be particularly interesting.

The market expects the US economy to have grown by 6.5% in the first quarter, but the signs are that we will see even stronger growth. The bigger the difference between the actual and the forecast, the stronger the market reaction.

Markets to Watch

The Gold, USD/CAD, and Copper markets are in focus today.

Gold

Gold didn’t react to the Fed’s message. This 4-hour chart shows the gold price reacting at dynamic resistance, although the time frame is not large enough to warrant a strong pullback. Nevertheless, gold’s inability to push over $1,800 spells troubles for the dollar sellers, as gold’s decline from all-time highs last year triggered a strong dollar reaction across the FX dashboard.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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