FED corporate bond buying announcement moves financial markets
Financial markets came to life this week as the US Federal Reserve unexpectedly announced that they would begin buying individual corporate bonds. The US dollar currency initially sold-off after the announcement, while stock markets and cryptocurrencies advanced alongside commodity prices. The Federal Reserve Chair, Jerome Powell, played down the significance of the move during his testimony before US Congress at Capitol Hill this week. Most economists believe that the latest aggressive policy action by the Federal Reserve underscores the central bank's strong commitment to stabilize the US and global financial markets.
- The USDJPY pair is only bearish while trading below the 108.00 level, key support is found at the 106.40 and 106.00 levels.
- The USDJPY pair is bullish while trading above the 108.00 level, buyers may test towards the 109.00 and 110.00 resistance levels.
Bitcoin recovered back towards the $9,600 resistance level this week after the pioneer cryptocurrency slipped below the $9,000 level in early week trading. News that a second wave of the COVID-19 virus had started in Beijing, caused traders to sell riskier asset classes. Bitcoin sometimes enjoys a positive correlation with the S&P 500 and can follow the direction of the index during times of extreme risk aversion. Sentiment data from Twitter also showed that retail traders were starting to grow more bearish towards Bitcoin, while institutional investments continued to grow.
- The BTCUSD pair is only bearish while trading below the $9,100 level, key support is found at the $8,700 and $8,100 levels.
- If the BTCUSD pair trades above the $9,100 level, buyers may test towards the $10,000 and $10,500 resistance level.
The Australian dollar fell sharply lower against a basket of currencies this week after the Australian monthly jobs reports showed 227,000 more job losses during the month of May. The monthly jobs report also showed the nation's unemployment rate ticking up to 7.1 percent. The heavy job losses came on the back of more lockdown measures in May, while the nation's unemployment rate officially hit a nineteen year high. The Australian dollar has recently been advancing the US dollar, with the pair trading above its 200-day moving average for the first time since early January.
- The AUDUSD pair is only bullish while trading above the 0.6830 level, key resistance is found at the 0.7000 and 0.7150 levels.
- The AUDUSD pair is only bearish while trading below the 0.6830 level, key support is located at the 0.6750 and 0.6600 levels.
The British pound fell broadly against a basket of currencies as the Bank of England kept interest rates on hold and announced a new policy measure. The British pound slumped as the Bank of England delivered a new £100 billion stimulus package to boost the United Kingdom's economy. The move took traders and investors by surprise, as the Bank of England was not expected to announce any new measures this week. Sterling slumped to its weakest trading level since June 1st after the Bank of England rate decision.
- The GBPUSD pair is only bullish while trading above the 1.2550 level, key resistance is found at the 1.2600 and 1.2640 levels.
- If the GBPUSD pair trades below the 1.2550 level, key support is located at the 1.2380 and 1.2330 levels.