Market Analysis by Abhishek Goenka, “Fed obliges the president; cuts rates to zero”

Date:

Trending

Just three days before the policy, the US Fed has cut overnight Federal funds rate by 1% to 0-0.25% range.

- Advertisement -

It has also announced USD 700bn worth of QE i.e. purchase of USD 500bn on US treasuries and USD 200bn of Mortgage-Backed Securities. The Fed has unleashed its entire arsenal in one go.

The markets were concerned about the widening FRA-OIS spread. The humongous liquidity injection is intended to tackle that. The Fed has also lowered the emergency borrowing facility for banks by 150bps to 0.25%.

- Advertisement -

It has cut Reserve Requirements to zero and has announced swap lines in coordination with other major global central banks to lower the cost of USD funding by 25bps.

The panic reaction of the Fed accentuates how bad it sees the economy going forward. The measures announced are more expansionary than in any of the previous crisis.

The Coronavirus situation has taken a turn for the worse in Europe. US has extended its travel ban to the UK and Ireland. The lockdown also poses challenges in Brexit negotiations between the EU and the UK. This is weighing on the Pound.

PM Johnson is in a tough spot on whether to push back and extend the transition period deadline or not, adhering to which was his core campaign promise.

With Fed cutting rates and launching QE, one would have expected the USD to weaken against majors. However, Euro and Pound have not gained as much as respective domestic concerns are dominating. Flight to safety is likely to continue and this should keep the USD bid.

SGX is indicating a 3.5% cut for Nifty on open. The rupee is likely to open around 73.90. Likely range 73.65-74.15 with a downside bias.

Forwards are likely to get paid on open. We also have the RBI S-B swap auction today the response to which could be tepid given that forwards are likely to be higher in the secondary market itself.

Eur 1.1108, GBP 1.2332, Aud 0.6145, Jpy 107.02, Cnh 7.01, WTI 31.23, Gold 1545, US 10y 0.67%, US 2y 0.27%, India 10y 6.30%, Dow +1985pts, DXY 98.38.

THE SNAPSHOTS

Sign up to get quick snaps of everyday happening, directly in your inbox.

We don’t spam! Read our privacy policy for more info.

- Advertisement -

Support our independent journalism PayPal (Outside India) For PayU (For Indian Readers).

Abhishek Goenka
Abhishek Goenkahttp://ifaglobal.net
Abhishek Goenka, Founder & CEO, IFA Global.

More Latest Stories

More Articles

Life Insurance Death Benefit Payouts: What Your Family Needs to Know

It is important to know more about life insurance policies and their operational modalities. The most important factor is, of course, the pre-fixed insurer...

Wired vs. Wireless Headsets: A Comparative Guide for Evolving Audio Needs

Across a wide range of demographics, including gamers, fitness enthusiasts, business executives, and remote workers, the use of headsets has dramatically increased. Headsets are an indispensable tool that may be used for business meetings, gaming audio improvement, and music listening while working out. Headsets are...

The Rise of Conversational AI: What It Means for Tech and SaaS Businesses

Back in the time, when AI was not as prominent, businesses used to struggle...

Union Budget 2025: Real Estate Experts See SWAMIH 2.0, ₹15,000 Cr State Support to Ease Housing Bottlenecks

The real estate sector views the Union Budget 2025-26 as a step toward addressing...

Healthcare Reactions to Budget 2025-26: Experts Back Investments in Cancer Care & AI but Call for Broader Mental Health Policies

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has drawn mixed reactions...

Preparing Your Staff To Host A Successful Business Event In Another City

A business event, a convention, and exhibition, a trade show - all of these...

Income Tax Slabs Revised in Budget 2025-26: Experts Applaud Relief for Salaried Class, VDA Taxation Still a Concern

With income tax exemption raised to ₹12.75 lakh and revisions in tax slabs, the...

Union Budget 2025-26: MSME Leaders Back Investment Limit Hike, Call E-Shram Expansion Crucial

The MSME sector has responded positively to the Union Budget 2025-26, with experts highlighting...

Union Budget 2025-26 Reactions: EV Makers Welcome Tax Relief and Infrastructure Investments

India’s electric vehicle industry has welcomed the Union Budget 2025-26, citing exemptions on capital goods and improved credit access as critical for scaling operations....

From GCC & AI to DeepTech Investments: How Tech Experts React to the Union Budget 2025

Finance Minister Nirmala Sitharaman’s Union Budget 2025-26 has drawn mixed reactions from technology industry...

Union Budget 2025-26 Reactions: Education Sector Applauds AI, Skilling Initiatives but Flags Funding Gaps

India’s education sector leaders have responded to the Union Budget 2025-26 with optimism and...

Budget 2025: Fintech Sector Hopes for Regulatory Support in Digital Lending and AI Investments

As Union Finance Minister Nirmala Sitharaman prepares to present the Budget 2025 on February...

Union Budget 2025: Investors, Startups React to Govt’s Push for Fund of Funds, FSS Scheme and Deeptech

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on Saturday, has drawn...

Union Budget 2025: Medical Education Seats Increased by 130% in 10 Years; 10,000 More to Be Added

Education sector Budget LIVE: Presenting the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced that the number of undergraduate and postgraduate medical seats has...

Union Budget 2025: Kisan Credit Card Loan Limit Increased to ₹5 Lakh Under Modified Interest Subvention Scheme

Finance Minister Nirmala Sitharaman, in her Union Budget 2025-26 speech, announced an increase in Kisan Credit Card loan limit under the Modified Interest Subvention Scheme from ₹3 lakh to ₹5 lakh. This move aims to provide greater financial support to farmers, fishermen, and dairy farmers...

Union Budget 2025: IIT Student Strength Doubles, ₹500 Crore AI Education Center Announced

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2025-26 in Parliament today, outlined...

Union Budget 2025 LIVE: FM Sitharaman Announces Reforms in Finance Sector; Increases FDI Limit to 100%

Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2025-26 in Parliament today,...

Union Budget 2025: Farming, Agriculture Sector Pushes for Greater Subsidies, Policy Support

With Union Budget 2025 just days away, the agriculture sector is vouching for a...

Budget 2025: Pre-Owned Car Market Requests Financing Reforms, Auto Industry Looks for GST Clarity

With the Union Budget just days away, the auto sector is hoping for game-changing...

Budget 2025 Expectations: Semiconductor Industry Looks for Support to Boost Domestic Manufacturing, Incentives, and Innovation Investment

As India's Union Budget 2025 approaches, the semiconductor manufacturing sector is seeking measures to...

From GST Reform to Supply Chain Stability: What the F&B and Restaurant Sector Expects from Budget 2025?

With Budget 2025 approaching, the restaurant and F&B sector is outlining its expectations for...

Krikya Bangladesh Casino App Review

The Krikya app delivers a seamless and engaging mobile gambling experience for users of...

IIFL Finance Thane Branch Raided by Income Tax Authorities

The Income Tax Department carried out a search operation on Tuesday morning at IIFL...

Budget 2025: Crypto Sector Looks For TDS Cuts, Loss Clarity and Investor-Friendly Tax Rules

As the Union Budget 2025 approaches, the Indian cryptocurrency industry is urging the government...

Budget 2025: Fintech Sector Hopes for Regulatory Support in Digital Lending and AI Investments

As Union Finance Minister Nirmala Sitharaman prepares to present the Budget 2025 on February...

Union Budget LIVE: Finance Minsiter Nirmala Sitharaman Tables India’s Budget for 2025-26

LIVE Union Budget Coverage: The Union Budget 2025, set to be presented by Finance...

AI in Skill Development: What Budget 2025 Should Do to Close the Workforce Skills Gap

India, with its vast pool of young talent, faces a significant challenge: a widening...

Cash out Tether USDT to Renminbi in Guangzhou

If you need to quickly and safely Cash out Tether USDT to Renminbi in...

Union Budget 2025 Expectations: Insurance Sector Eyes Tax Incentives, Sops to Expand Health Insurance Reach

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2025 on February...

Union Budget 2025: Investors, Startups React to Govt’s Push for Fund of Funds, FSS Scheme and Deeptech

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on Saturday, has drawn...

IIFL Finance Thane Branch Raided by Income Tax Authorities

The Income Tax Department carried out a search operation on Tuesday morning at IIFL...

Evolution of Festival Advertising – A journey from Traditional to Hyperlocal Strategies

When it comes to festival advertising, brand strategies have seen notable changes shape the...

Budget 2025: Crypto Sector Looks For TDS Cuts, Loss Clarity and Investor-Friendly Tax Rules

As the Union Budget 2025 approaches, the Indian cryptocurrency industry is urging the government...