Emergency US Fed Rate Cut

[Lawrence McOchillo]

Hi, could you give me a few pointers on how I can benefit from the emergency 50bps Fed rate cut?

[Simon Mugo]

Well, initially the biggest loser from the Emergency Fed rate cut was the US dollar, which fell to new lows against its main peers, as tracked by the US Dollar Index. However, as other Central Banks have followed suit including those of Australia and Canada, the dollar has recovered most of yesterday's losses as its peers head lower.

However, it seems like most major Central Banks will follow suit, which means that most currencies are likely to lose value in the short-term. The best trade right now seems to be in gold, which has been on an uptrend since February and has the potential to rally much higher if the current market environment persists. Gold is regarded as a safe-haven asset and it usually rallies in times like this.

I would definitely buy and hold gold this year as the coronavirus outbreak plays out amid significant easing programs being implemented by the major Central Banks.