The US dollar was trading mostly sideways during the Wednesday’s trading session despite disappointing macroeconomic data. But that changed after Federal Reserve Chairman Jerome Powell delivered a surprisingly dovish speech, after which the greenback plunged.
Powell delivered a speech titled “The Federal Reserve’s Framework for Monitoring Financial Stability” at the Economic Club of New York today. Markets especially focused on one particular statement in the speech:
Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth.
The statement contradicted the previous comments from the Chairman, when he was saying that the interest rates are far from the neutral level. But while such words were surprising, they were not completely unexpected, echoing comments from some other Fed members, who were saying that the rates are close to the neutral level. Now, market participants wait for tomorrow’s release of the minutes of Fed’s latest policy meeting.
As for US macroeconomic data, basically all reports released in the United States over Wednesday were bad. Most important of them was gross domestic product, which showed a 3.5% growth in the third quarter of this year according to the preliminary estimate, the same as in the previous estimate, whereas analysts had expected a small positive revision to 3.6%.
EUR/USD jumped from 1.1285 to 1.1383 as of 19:21 GMT today. GBP/USD surged from 1.2742 to 1.2839. USD/JPY opened at 113.78, rallied to the daily high of 114.03, but retreated to 113.54 later.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.
Be First to Comment