Powell Speaks, Greenback Breaks Out Vs The Majors
Shain Vernier • 2 min read
The Greenback is on the warpath today, posting big gains across the majors. The key movers have been the USD/CHF (+1.07%), EUR/USD (-0.79%), USD/JPY (+0.81%), and AUD/USD (-0.81%). As of now, the rise in U.S. Treasuries and a monotone Jerome Powell interview are being credited with the move.
At the Wall Street Journal Jobs Summit, Fed Chairman Jerome Powell talked a bit about the U.S. economy, monetary policy, and the Greenback. Here are a few of the highlights:
- “We’re still a long way from our goals of maximum employment and inflation averaging 2% over time.”
- The FED will maintain low interest rates and large asset purchases until “substantial further progress has been made toward employment and inflation goals.”
- Pertaining to recent spike in bond yields: “it was something that was notable and caught my attention.”
All in all, it was more of the same out of Powell. Most members of the media are making a big deal that he didn’t go into detail about the recent jump in U.S. Treasuries and what it could mean. Today, the U.S. 10-year T-note rose to 1.545%, the highest level since pre-pandemic 2020. Judging by this metric, Fed tightening may become a certainty to open 2022.
The Greenback has fared well following Powell’s comments. Rates are up across the board, especially in the USD/CHF.
Greenback Breaks Out, USD/CHF Drives Toward 0.9300
In a Live Market Update from Monday, I outlined a short trade in the USD/CHF. It was an extremely close sell entry at 0.9194; ultimately, brokerage fills determined if this one was a winner or loser. However, since the pullback of 2 March, this market is up, up, and away.
Overview: Does anyone really think that the Fed is going to raise rates anytime soon? No. But, they can’t hold them at zero forever. Although the Fed remains ultra-dovish, it’s beginning to look like a slight policy shift is on the way for the Greenback. Perhaps we will learn more at the March 16-17 FOMC Meeting.