All Eyes on the U.S. Stock Market

FXOpen

From Bitcoin to fiat currencies, everything moves in a correlated order. April turned out to be one of the best months in history for the US equities, but the road ahead is full of uncertainties.

The two most important central banks in the world, the Federal Reserve and the ECB announced last week their monetary policy stance. Moreover, the market focused on what the central banks plan to do next – and it was not disappointed.

As it turned out, both the Fed and the ECB stand ready to flood the financial system with whatever amount of money needed. To be fair, they should do so.

Fed Unlikely to Fulfill Its Mandate

The Federal Reserve’s dual mandate of price stability around 2% inflation and job creation took a hit lately. The health crisis created by the coronavirus outbreak led to millions of people applying for unemployment benefits in the last six weeks.

Only in February this week, the Fed dealt with problems related to full employment – not anymore. Chair Powell’s press conference reiterated the readiness to do more and the Fed’s willingness to let inflation concerns for some other time.

All Eyes on the U.S. Stock Market

Judging by historical data, the US real GDP is poised for a sharp move lower – implying the Core CPI, which lags six quarters, will move lower as well. In a way, it is no wonder considering the lower oil prices we see these days. But inflation threatening the negative territory has more implications for the Fed’s mandate than it appears at first. Is it possible for the Fed to turn to negative interest rates?

ECB Stands Ready to Do More If Needed

Last Thursday, the ECB delivered its monetary policy statement, signaling it stands ready to do everything in its powers to support the Euro area economies. While it kept the interest rates steady, it announced TLTROs (Targeted Long-Term Refinancing Operations) at -1% and a possible extension of its pandemic emergency program beyond the end of 2020.

All Eyes on the U.S. Stock Market

While the move is welcomed, it looks like peanuts when compared with what the Fed does. According to the Federal Reserve Bank of St. Louis, the US stock of money, M2, has risen sharply. It comes in contrast with the inflation expectations presented earlier, but it just shows what the Fed is facing during this crisis.

All Eyes on the U.S. Stock Market

Financial markets tracked the US stock market in the last two months. The sharp recovery there sent the USD lower and the EUR, AUD, or GBP higher.

All Eyes on the U.S. Stock Market

Judging by the long-term perspective, the current dip in the US stock market prices is just a correction, like many other ones in the past.

Does it mean the USD will continue its slide?

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Weekly Market Wrap With Gary Thomson: NIKKEI-225, USD/JPY, GBP/USD, USD/CAD, Gold Weekly Market Wrap With Gary Thomson: S&P500, USD, SNB, TSLA A Yen For Volatility: US Dollar Surges as Japan Ends 8 Years of Negative Rates Weekly Market Wrap With Gary Thomson: US500, USD, US Inflation, USD/JPY Australian Dollar Volatility Ends in Lull Ahead Of US Data

Latest articles

Indices

Although UK-100 Index Is Near All-time Highs, UK Economy Slips into Recession

Technically, a national economic recession is defined as two consecutive quarters of contraction, and yesterday's Office for National Statistics data confirmed that this has happened — UK GDP fell in the third and fourth quarters of 2023 by 0.1% and

Cryptocurrencies

DOGE Price Increases by 170% in Less Than 2 Months

On February 1, 2024, the DOGE/USD rate was = 0.0783. On the last Friday of March, it rose to 0.2150. The rising price means Dogecoin is now the eighth-largest cryptocurrency in the world by market capitalization, overtaking Cardano

Commodities

Market Analysis: Gold Price and Crude Oil Price Gain Bullish Momentum

Gold price started a steady increase above the $2,200 resistance level. Crude oil prices are gaining bullish momentum and might rise toward $85.00.

Important Takeaways for Gold and Oil Prices Analysis Today

· Gold price started a decent increase

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.