Dollar Could Snap Back Into Life as Fed Likely to Renew Recession Fears

imageForex3 hours ago (Apr 28, 2020 02:03PM ET)

(C) Reuters.

By Yasin Ebrahim

Investing.com – The dollar has made a timid start to the week, but with the Federal Reserve set to kick off its two-day meeting Tuesday some on Wall Street are backing the greenback to find its footing and mount a rally.

The Federal Reserve’s update on the economy due Wednesday will likely lay bare the underlying economic weakness and shift investor focus to the looming recession, sparking a bid in the safe-haven dollar, Bank of America (NYSE:BAC) said.

“The Fed will recognize deterioration in economic conditions and likely signal that rates will remain low for an extended period,” BofA said. “A sobering assessment of economic activity by the Fed, as well as by other global central banks this week, could well begin to shift the prevailing focus away from policy stimulus and back to the reality of global recession.”

Alongside its monetary policy statement, the Fed will release its summary of economic projections on a range of measures including growth, employment, inflation and interest rate projections.

The forecasts will likely provide key insights into how deep and dark a widely expected recession will be and also the extent to which the Fed is willing to keep its ultraloose monetary policy in action.

The two-day Fed meeting is expected to culminate with an unchanged rate decision on Wednesday and comes as economic activity continues to deteriorate with consumer confidence last month plunging to multi-year lows.

Sentiment on the dollar has swung negative in recent weeks, with investors upping their bearish bets on the greenback following the Fed’s inventions in the market, including expanding access to dollars to avert a funding crisis.

Also supporting the dollar’s move off its session lows, GBP/USD and EUR/USD moved off session highs to trade about 0.4% and 0.1% higher respectively, ahead of monetary policy decision from the Bank of England and European Central Bank expected in the coming days.

Dollar Could Snap Back Into Life as Fed Likely to Renew Recession Fears

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published. Required fields are marked *

Join The Exclusive Underground Investor Premium Member Status! Your Trade Ideas Are On The Next Page...


 
 


 

By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected. Remember that you can opt-out any time, we hate spam too!