DXY Falls Ahead Of The Fed’s Announcements

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Commenting on the Dollar Index (DXY) and today trading, Gorilla Trades strategist Ken Berman said:

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The major indices are mixed and little changed at midday following a bearish overnight session that was dominated by a string of negative economic surprises and another uptick in the number of new COVID cases. In economic news, the Consumer Price Index (CPI) and the core CPI both missed expectations, coming in at -0.1%, marking the second negative month amid the drop in personal spending. The Chinese CPI and Producer Price Index (PPI) were also lower than the consensus estimate, adding to the worries regarding the global economy.

DXY And Treasury Yields Fall

The Fed’s rate decisions and monetary statement will highlight the afternoon session, so volatility could pick up significantly in the last couple hours trading. The Dollar Index (DXY) is lower of the tenth time in twelve sessions ahead of the Fed’s announcements and Treasury yields are also lower, as investors are expecting a dovish statement, even if further monetary stimulus is unlikely. The Central Bank's economic outlook will be in focus, while some rumors suggest that some form of yield curve targeting might also be on the table.

Market Wrap

Dow: 27,046, - 226 or 0.8%

S&P 500: 3,196, - 11 or 0.3%

Nasdaq: 10,006, + 52 or 0.5%

Russell 2000: 1,472, - 35 or 2.3%

Market breadth has been relatively weak again this morning, as small-caps remain under pressure, with decliners outnumbering advancing issues by a 3-to-1 ratio on the NYSE at midday. Only 2 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 51 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to intraday selling pressure a mixed and choppy afternoon session. Yesterday’s trends continued at the level of the key sectors in early trading, with tech stocks performing relatively while cyclical issues and especially the most lockdown-sensitive stocks losing ground. Stay tuned!