New stimulus from the Federal Reserve | 25 December 2020

New stimulus from the Federal Reserve


#SP500:


The Federal Reserve decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. This is a positive signal for the US stock market!


Trading recommendation: Buy 3680 and take profit 3735.


New stimulus from the Federal Reserve


#JPMorgan:


The Federal Reserve Board released a second round of bank stress test results this year, which showed that large banks had strong capital levels under two separate hypothetical recessions. The Board's stress tests help ensure that large banks can support the economy during economic downturns. The tests evaluate the resilience of large banks by estimating their losses, revenue, and capital levels—which provide a cushion against losses—under hypothetical scenarios over nine future quarters. This is a positive signal for the shares of the largest American banks.


Trading recommendation: Buy 117.00 and take profit 118.50.


New stimulus from the Federal Reserve


XAUUSD:


We are expecting a bullish rally in the gold market in the new five-day period. The US Federal Reserve has updated its macroeconomic forecasts and expects inflation to rise to 1.8% next year, promising to keep interest rates at 0.1% until 2024. Thus, the real negative interest rate in the United States next year will increase from the current level of 1.1% to 1.7%. This is a positive signal for gold, as real negative interest rates force investors to buy precious metals to protect their capital from rising inflation.


Trading recommendation: Buy 1889 and take profit 1914.

 

David Johnson
Analyst of «FreshForex» company
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