ZFX: Markets fluctuate after Fed actions. Low rates for years?

Stocks in Asian Region fell after the Fed latest comments. On Thursday European session, dollar in general bounces back and there is a sign that risk-off mode returns. The safe-haven yen and gold also traded higher.

On Wednesday, the Fed said that it would keep the interest rates near zero until the end of 2022 after the FOMC meeting. Even the Fed actually met expectations, investors feel gloomy after digesting the Fed actions, which likely indicated a pessimistic outlook of the US economy. Fed members projected that the US economy would shrink 6.5% this year and the unemployment rate would be 9.3% at the end of the year.

Of course, the Fed news may just a triggering point of profit-taking, so called “buy the rumor sell the news”. Recently, the downtrend of the dollar and rally of stock markets were the main theme of the whole financial market.

ZFX analyst Jacob Leung said that, it is actually not surprising to know that Fed guarantee low interest rates for a certain period of time, as the market even expected negative interest rate earlier. However, Fed bought the fears of economic hard time back to the markets, which may drive the reversal move, especially the markets were quite bullish in the past few weeks.

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