Fed Preview: More tools would bring down the dollar

Some may fear the Fed has run out of ammunition after massive moves in response to coronavirus. Stocks may fall and the safe-haven dollar may rise in response, according to FXStreet’s analyst Yohay Elam.

Key quotes

“The bank releases its growth, employment, inflation, and most-importantly interest rate projections, in its March, June, September, and December meetings. If projections take a deep dive, it would imply that the Fed will continue doing whatever it takes.”

“Downbeat projections would depress markets as they dampen companies' prospects. In turn, the safe-haven dollar may benefit from fresh demand.”

“If officials convince markets that they have additional tools at their disposal, investors may react positively and the greenback may give ground.”

“If the pledge to support the economy is vague and especially if Powell seems reluctant to act, markets may turn down and the greenback could see fresh demand. The notion that the bank has run out of ammunition may scare investors.”