Daily summary: FED surprises markets

• FED unprecedented inter-meeting rate cut
• Disappointing G7 conference
• RBA lowers interest rates

The awaited G7 conference disappointed the markets as it did not bring any specific decisions regarding ongoing situation. Finance ministers and central bankers merely issued a statement in which they pledged to take all necessary actions in order to stimulate economic growth and stop the spread of the coronavirus. Unfortunately besides these general announcements no other details were presented, which undermined earlier optimism as the markets hoped that fiscal and monetary stimulus will be provided.

Before the conference the RBA has lowered interest rates by 25bps to 0.5% being the first central bank that decided to take actual measures to support the economy from the serious impact of the spreading epidemic. As a result Australian dollar strengthened as some investors expected that RBA may cut interest rates by 50 basis points.

However, FED prepared a real surprise for investors, unexpectedly lowering benchmark rates by 50 bps, saying that the coronavirus poses evolving risks to economic activity.In response to the news US dollar weakened considerably against other major currencies. The US indices after initial gains returned to the downward trend, breaking the opening level of today's session. At the moment all major US stock indexes are trading roughly 1% lower. Market sentiment was slightly better in Europe and most of the major indexes gained approximately 1%. FED decision proved to be positive for gold and silver as their prices surged significantly higher, gaining respectively 3.09% and 2.38%.

On the data front we had a Eurozone CPI Flash figures which came slightly lower than expected but markets pay little attention to these information’s at present. Coronavirusremains biggest concern and markets will be awaiting further actions from central banks and government officials aimed at improving the economic situation.

Tomorrow investors' attention should focus mainly on the data from the US, namely ADP non-farm employment change and ISM non-manufacturing PMI.  Also BOC decision regarding interest rates might cause some market movement.

EUR/USD tries to break through key mid-term resistance around 1.1200 Source: xStation5