EURUSD, stocks rise as Fed cuts the IOER rate

Fed cuts the IOER rate to 2.35%
Central bank sees solid growth
EURUSD, US500 up on the decision

The Fed cut the IOER rate today that is being paid on banks’ reserves in a move that has more technical than policy measure. As the interbank liquidity has been low recently such move was anticipated and mustn’t indicate policy change.

In fact the Fed called economic growth solid and did not address global growth concerns nor weakening in soft US indicators. As such market expectations for the policy rate cut later this year look somewhat overblown.

Still the US dollar slid and stocks gained after the release of the statement as markets seemed to cheer the IOER move.

After a strong ADP but a very weak ISM report it looks like markets will need to look for more clues from the two remaining big ticket reports this week: the NFP and the ISM non-manufacturing – both due on Friday.

EURUSD, US500 moved up after the FOMC decision. Source: xStation5

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