Federal Reserve, Central Bank, and United States Dollar

Federal Reserve, Central Bank, and United States Dollar

Let’s check what is happening in the international market. As the Federal Reserve rate cut brings more worry than a calm, dollar is downbeat. Cut of the Federal Reserve fails to stabilize equities. Coronavirus is roiling financial markets. As investors bet more easing is likely, the dollar sold.

The United States Federal Reserve’s emergency 50 basis point rate cut sparked more anxiety. On Wednesday, the dollar hovered near five-month lows versus the yen. The concern was about the coronavirus impact, and it sent Treasury yields tumbling to record lows.

Rate cuts deemed insufficient in offsetting risks posed by the global spread of the coronavirus. Thus, investors were flocking to traditional safe havens. So, against the Swiss franc, the dollar traded near the lowest in almost two years.

Traders forecast that the Federal Reserve will cut rates more than the European Central Bank. Thus, from the broad-based dollar weakness, the euro was one of the currencies to benefit.


On Tuesday, there was disappointment that a Group of Seven statement did not lay out a specific response to a global slowdown caused by the coronavirus. It reinforced the view among some investors that policymakers are fallen behind the curve.

Masafumi Yamamoto is the chief currency strategist at Mizuho Securities in Tokyo. He said that Federal Reserve and the G7 were not enough for supporting the markets.

He thinks that the Federal Reserve rate cut is terrible for dollar/yen. It is because currently, Treasury yields are meager. Because the Federal Reserve will most likely ease more than the European Central Bank, the dollar’s weakness is reflected in the euro.

On Wednesday in Asia, the dollar fell to 106.85 yen. It is its lowest in almost five months. Nevertheless, then it steadied at 107.36 yen.

Close to its weakest level in almost two years, the dollar bought 0.9566 Swiss francs.

It is the current leading news of the market.

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