Federal Reserve cut rates due to weak inflation and global growth concerns
The Federal Reserve cut interest rates by twenty-five basis points this week, as the central bank battled to keep United States economic growth on track. The market reaction to the rate decrease saw US equity markets rallying and the US dollar losing strength. The FOMC monetary policy statement provided hints that the central bank may not cut interest rates again this year. The monetary policy statement mentioned weakening global growth and below-trend inflation as the main reason for the preventative rate reduction. The US economy posted stronger-than-expected growth figures this week, with US third-quarter GDP expanding by 1.9 percent.
The EURUSD pair is only bearish while trading below the 1.1110 level, key support is found at the 1.1065 and 1.1044 levels.
If the EURUSD pair trades above the 1.1110 level, buyers may test towards the 1.1210 and 1.1260 resistance levels.
Bitcoin traded close to the $9,000 level this week after the number one cryptocurrency by market capitalization struggled to hold price back above the psychological $10,000 level. Bullish comments from Chinese President Xi Jinping had propelled the entire cryptocurrency market higher and sent Bitcoin towards the $10,550 level. Increased trading volumes on the Bakkt futures platform also helped Bitcoin stay above the $9,000 level. The BTCUSD pair broke its three-month losing streak, as it closed the month of October in the green, with a gain of around ten percent.
- The BTCUSD pair is only bearish while trading below the $8,800 level, key support is found at the $7,500 and $7,100 levels.
- If the BTCUSD pair trades above the $8,800 level, buyers may test towards the $9,500 and $10,000 resistance levels.
The British pound gained ground against the US dollar after a United Kingdom General Election was called for December 12th. The opposition Labour party finally agreed to a General Election, following a hard-fought battle by the current British PM, Boris Johson, to get the UK leadership issue resolved before Christmas. Brexit now takes a back seat, after EU leaders agreed to extend the deadline that the UK leaves the European Union until January 31st. The Conservative party are the favorites to win the upcoming General Election according to current opinion polls, which is bullish for the British pound currency.
- The GBPUSD pair is only bearish while trading below the 1.2850 level, key support is found at the 1.2790 and 1.2710 levels.
- If the GBPUSD pair trades above the 1.2850 level, buyers may test towards the 1.3000 and 1.3050 resistance levels.
Weaker than expected quarterly Consumer Price Index inflation data from the Australian economy heightened calls for a December rate cut from the Reserve Bank of Australia. Third-quarter CPI inflation came in at just 0.5 percent, placing pressure on the RBA to slash interest rates in December. The central bank is widely tipped to keep interest rates on hold at the November interest rate decision next week, following a recent series of dovish rate cuts. Australian Core CPI has persistently remained below the Reserve Bank of Australia’s 2.0 percent annual target.
- The AUDUSD pair is only bullish while trading above the 0.6840 level, key resistance is found at the 0.6960 and 0.7000 levels.
- If the AUDUSD pair trades below the 0.6840 level, key support is located at the 0.6810 and 0.6760 levels.