Dollar falls after dovish FOMC meeting, Oil higher on demand pickup, Gold struggles

The Fed kept rates unchanged and signaled they will keep them there until they are confident the economy has bounced back. The Fed will also rely on health experts in determining the outlook and that prevented them from giving any additional guidance today. Fed Chair Powell pretty much signaled they are not done stimulating the economy since pandemic risks will persist throughout next year at the very least.

Today’s FOMC meeting did not shed any new light on future policy actions but allowed Powell to reiterate they are going to exhaust every stimulus measure possible until the economy is back on track.  Powell did take today’s presser as an opportunity to put pressure on Congress to deliver more stimulus. The rising balance sheet is not a concern for Powell, so the monetary stimulus trade should remain in place.

Virus Treatment Hope

Risk appetite remained strong after the Fed signaled, they are ready to deliver more stimulus if needed and after the reports that the FDA would use emergency authorization for Gilead’s Remdesivir. It seems treatments and vaccines may be a lot closer than what traders initially anticipated. Pending FDA approval, vaccine and treatment production will struggle to meet demand, so traders need to be cautious with the optimism regarding positive trial news. While some pharmaceutical companies are optimistic that both a vaccine and treatment could be ready by the fall, it would not be mass produced in time to cover the whole economy.


The dollar extended its declines after the Fed said that if further support is required, the Fed will expand their stimulus measures.  The Fed’s smorgasbord of stimulus throughout this coronavirus pandemic have set the table for an eventually much weaker US dollar. 


Oil prices rallied as energy traders speculated crude demand will continue to improve and as global production levels are forced lower as storage capacity runs out.  The weekly EIA crude oil inventory showed gasoline inventories posted a surprise draw of 3.7 million barrels, prompting an unexpected silver lining to an otherwise bearish report.  Crude oil inventories saw another massive build of 9 million barrels, lower than the expected 11.7 million consensus estimate. 

Oil prices will continue to play ping-pong here, but continued optimism on the virus front will do wonders improving both economic activity and crude demand forecasts.  The next few weeks could get ugly again fairly quickly for oil prices, but energy markets might see volatility ease if steady production cut announcements occur across the globe. 


Gold is caught in a tug-of-war between a steady stream of positive news on the virus front and rising expectations that global fiscal and monetary stimulus efforts will only intensify.  The Fed was pretty clear they are not done with announcing new stimulus measures and that should ultimately provide a nice back drop for higher gold prices. 

A wave of optimistic headlines with both the treatment and vaccine of COVID-19 prevented gold from surging today.  While optimism is growing that a major breakthrough is nearing with the fight against the coronavirus, an immediate solution is still some time away.  Economic activity will not return to its pre-crisis levels for at least a year and that should provide a strong backdrop for gold. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.