Powell’s Second Day Testimony Keeping the USD in Check - Forex News by FX Leaders

Powell’s Second Day Testimony Keeping the USD in Check

Posted Wednesday, February 24, 2021 by
Skerdian Meta • 2 min read

Jerome Powell sent the USD down yesterday, after he confirmed that the FED will keep printing money and buying treasury bonds, sine the economy has lost momentum. But, the economy has picked momentum instead, as the data of recent months have shown. Today he is sounding a bit less dovish in the second day of the testimony:

 

FED’s Jerome Powell Testimony

  • Bond buying will continue our current pace until see the actual data moving closer to inflation, employment goals
  • This will be the year in which the Fed engages with public on digital dollar
  • Communicate as far in advance as possible on progress
  • Could will need legislative authority for for digital dollar
  • There is a lot of slack in the labor market
  • There is a long way to go to maximum employment
  • Fed is doing outreach research, consultation on climate risk to financial institutions he is confident that can reach 2% inflation and moderately exceeded
  • We want to see inflation expectations anchored at 2% not below
  • We believe we can do it, we will do it, it may take more than 3 years
US stocks have scene the S&P index moved back toward unchanged and marginally positive. The Dow industrial average has also moved back into the black.. Disney shares have moved above $200 for the 1st time.
The NASDAQ index still lags with a decline of -0.69% at 13372.24. But that is still off its lows of 13286.59.
More Powell highlights:
  • capital big banks has risen, they can keep blending
  • situation very different to global financial crisis
  • need a strong recovery, continued support from monetary policy
  • weakness in the economy now is unusually concentrated in sectors that depend on close contact
  • single best growth – creating measure is ending pandemic: need vaccination, mask wiring
  • picture mixed in answer to asset bubble question
  • leverage in financial system is moderate
  • some asset prices are elevated by some measures
  • Fed expects inflation to move up but don’t expect that to be persistent or high
  • inflation dynamics don’t intend to change overnight
  • economy still has a great deal of slack
  • Fed guidance tells markets clearly when we will taper bond buys and raise rates
  • we have tools to deal with unwanted higher inflation
  • one-time price rises don’t necessarily spur inflation
  • number of commercial real estate sectors under pressure
  • best for commercial real estate is to curb virus
  • big parts of economy are largely or even fully recovered
  • economy went sideways through January
  • what Covid hit sectors need is an end to the pandemic
  • as cases recede, may be fairly soon, will see job numbers begin to creep back up
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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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