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Fed’s dovish tone lifted stocks and treasuries; Dollar Index down

By Margaret Yang

At 2 am this morning, the US Fed announced that it is keeping the target federal funds rate unchanged at 0.25-0.50% due to concerns on rising risks of global financial and economic developments. This is within expectation as the probability of a March rate hike based on Bloomberg world interest rate probability was only 4% before the announcement. The chance of an April or June rate hike now stands at 7.7% and 37.8% respectively.

The US equity markets welcomed this decision as S&P rose 0.6% to 2027.2 and closed at the highest level this year. 10-year US treasury yield is down from 1.97% to 1.91% with Treasury note price up 0.55%. The USD dollar got hammered and went down 1.2% from 97 to 95.77. Euro, Yen, AUD, SGD, and CNH were strengthened against the USD. Weak Dollar sent Crude Oil and Gold higher.

Asia markets soared this morning, with the Straits Times Index up 1.4%, Nikkei up 1.55% and Hang Seng Index gapped up 1.9%. With ECB, BOJ and the FED decisions all settled for this and from last week, equity markets may finally take a breath and embrace a relief rebound.

US SPX500 –Cash


Key technical to watch:

  • Double bottom
  • Price crossed above 200-Day moving average, which is sloped down
  • Immediate resistance level – 2081
  • Next resistance level – 2132 (major)

US Dollar Index June 2016


Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.