The United States Dollar once again finds itself in mixed territory this morning after Jerome Powell spoke at the Economics Club of Washington yesterday afternoon.
Overview
During his Q-and-A-session, he made it clear that last Friday’s gangbusters jobs numbers would not change the Federal Reserve’s tightening path.
Powell’s message was delivered in a way that ascertains the Fed’s ongoing path of cautious wait-and-see approach so as not to exacerbate the perception that he was going to crush markets’ hopes for loosening of monetary and financial conditions as things start falling into place for the Fed’s ongoing plan of action.
Several governors from the Fed are slated to speak today, theoretically shedding more light on the greenback’s path. There is some concern growing about just how disinflationary things will get when last month’s reading of used car prices went up more than expected.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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CAD ⇑
The Canadian dollar found relative strength yesterday as Bank of Canada President Tiff Macklem spoke to the CFA Society in Quebec City, highlighting the basics of monetary policy instruments at the same time as Powell’s session in Washington, DC.
Powell’s words drove price action more, spiking CAD prices nearly half a percent in tandem with the rest of the G10 before recovering close to the baseline. The Loonie’s action yesterday and into this morning was far more driven by a 2% increase in oil prices, driving demand for the currency.
EUR ⇓
The shared European currency continues to be range-bound to the same highs and lows seen over the last two weeks. Markets were initially reading Jerome Powell’s talk as dovish yesterday afternoon, spiking EUR prices, but soon recovered completely.
Powell’s words made it clear that the shared currency remains under significant pressure from an overall-hawkish Fed profile. Klaas Knot from the ECB is slated to speak today, nut his comments are unlikely to move the needle much. German CPI data, delayed a week, will shed more light on the direction of the Euro.
