The Fed cut rates 25 basis points, in line with expectations, and signalled there would be two more rate cuts this year. This was enough to trigger a big rally on Wall Street, with equities surging and bond yields tumbling. The important US 10-year crashed below 4%, while the US Dollar plummeted, surging currency crosses. The EUR jumped above 1.1900, while the GBP managed to break above 1.3700. The Fed noted the need for lower rates as the US Labour market is softening and needs stimulus.The plunging reserve allowed for big gains in the commodity currencies, building on recent gains and surging market confidence. At the time of the cut, the AUD jumped back above 0.6700, while the NZD, regained the important psychological 0.6000 barrier. However this was the initial kneejerk reaction as we've seen in the past, the AUD & NZD have now dropped back to .6660 & .5970 respectively. The indication of further rate cuts, this year, is confirmation the Fed is listening and is a boost to markets.
