Dollar Falls As Fed Expands QE Program
March 23 2020 - 7:03AM
RTTF2
The U.S. dollar dropped against its major trading partners in
the European session on Monday, after the Federal Reserve pledged
to purchase an unlimited amount of Treasurys and mortgage-backed
securities to support the economy from impact of the coronavirus
pandemic. Citing the tremendous hardship being caused by the
outbreak, the Fed said it is committed to using its full range of
tools to support households, businesses, and the U.S. economy.
The central bank said it will buy bonds "in the amounts needed
to support smooth market functioning and effective transmission of
monetary policy."
The Fed had previously announced it would purchase at least $500
billion of Treasury securities and at least $200 billion of
mortgage-backed securities. The US central bank also announced
three new credit facilities and an upcoming Main Street lending
program that would provide up to $300 billion in funds.
The currency has already been under pressure as U.S. massive
stimulus plan was deadlocked in the Senate.
Senate Democrats late Sunday blocked the passage of a third
economic stimulus package to combat the impact of coronavirus.
Voting largely along party lines, the Senators voted 47 to 47 on
the procedural motion, falling short of the 60 votes needed to
advance the bill.
The greenback was trading at 0.9806 against the franc, down from
a high of 0.9900 set at 6:30 am ET. The greenback may locate
support around the 0.97 level.
The greenback declined to 1.0806 against the euro from Friday's
closing value of 1.0698. The greenback is poised to challenge
support around the 1.10 level.
The greenback pulled back to 1.1675 against the pound, from a
high of 1.1506 seen at 7:30 am ET. The greenback is seen finding
support around the 1.22 mark.
Survey results from IHS Markit showed that UK households'
perception about financial well being deteriorated in March to its
lowest level since mid-2019.
The household finance index fell sharply to 42.5 in March from
47.6 in February. This was the lowest since May 2019, contrasting
with February's survey high.
The greenback eased to 0.5845 against the aussie, 1.4336 against
the loonie and 0.5738 against the kiwi, from its early highs of
0.5700 and 1.4491 and a 4-day high of 0.5586, respectively. If the
greenback falls further, it is likely to test support around 0.64
against the aussie, 1.33 against the loonie and 0.68 against the
kiwi.
The greenback fell back to 109.82 against the yen, from a high
of 111.25 hit at 6:30 pm ET. Further decline in the currency is
likely to see support around the 108.00 level.
Looking ahead, Eurozone flash consumer sentiment index for March
is set for release at 11:00 am ET.
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