Breaking: Fed chair Powell speech sends US Dollar lower

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

This is a developing story

Fed Chair Powell’s policy speech is a key event today:

In his first comments since the post-decision press conference on November 2, where he warned of a higher terminal rate, Fed chair Jerome Powell said today:

As a consequence of the dovish comments, futures tied to the Fed policy rate imply about a 75% chance of a 50bp hike in Dec vs a 25% chance of 75bp.

There will be a Q&A with further comments to follow:

Meanwhile, since the November 2 presser, markets have tuned into other Fed officials who have been framing the bank’s message. There have been conflicting tones from officials with, for instance, Fed vice chair Lael Brainard who has played up the move to smaller hikes, while others such as St Luis CEO, James Bullard, have played up the need for even higher rates.

The November 2 FOMC statement seemed to hint at a pivot, but Chair Powell pushed back against such notions of a pivot during his press conference.

”We believe he will take the same tone today; that is, the Fed may move to smaller hikes but the terminal rate is likely to be much higher than previously expected,” analysts at Brown Brothers Harriman said.

Fed’s Powell said today, ”it seems to me likely’ rates must ultimately go ‘somewhat higher’ than policymakers thought in September.”

Nevertheless, the dollar index, DXY, has fallen on the initial release of the speech from the 107 area to test below 106.70. It remains above the low made of 106.29 on the day but was below the 20-year high of 114.78 on Sept. 28. The greenback is on track for its biggest monthly loss since September 2010 as investors look toward the Fed reaching a peak rate early next year.

Jerome H. Powell took office as a member of the Board of Governors of the Federal Reserve System on May 25, 2012, to fill an unexpired term. On November 2, 2017, President Donald Trump nominated Powell to serve as the next Chairman of the Federal Reserve. Powell assumed office as Chair on February 5, 2018.

[/s2If]
Join Our Telegram Group