ForexLive Americas FX news wrap: Powell issues surprise statement

Forex news for North American trade on Feb 28, 2020:

Markets:

  • Gold -$59 to $1585
  • WTI crude down $1.83 to $45.26
  • US 10 year yields down 11 bps to 1.15%
  • S&P 500 down 24 points to 2954
  • JPY leads, NZD lags

There are no easy answers in a tick-by-tick play-by-play at a time like this. Fear and greed dominate. The surprise news of the day was a statement from Powell at 2:30 pm ET. The comments on mundane at face value but they come in the context of the market pricing in a full 25 bps cut on March 18 and a 70% chance of 50 bps. Given that, they’re an endorsement of the market view.

The initial reaction was some mild US dollar selling but that accelerated late, particularly as cable bears took a momentary breather to square up. GBP/USD fell as low as 1.2726 before rebounding to finish 85 pips higher.

The stock market didn’t know what to make of Powell at first and the bears and bullls battled it out. The bears had the upper hand with the S&P 500 down 90 points with 15 mins of trading but that’s where the buyers stepped in for a big rally into the close (and beyond). However that change did little to impress USD/JPY, which finished only 30 pips off the lows and down 170 pips on the day.

The Australian and New Zealand dollars both hit an airpocket into the London fix in messy 40 pip drops but recovered quickly afterwards. They held tight from there before a late bounce on Powell. CAD also got some late life to minimize the damage on the day.

The euro continues to benefit from carry-trade unwinds and finished 25 pips higher.