United States awaits testimony from new Fed Chair Jerome Powell
The US Dollar edged higher against its major peers on Monday, before retracing some of its gains as investors eyed a speech by the new Chair of the Federal Reserve at 13:00 UK time today.
Freshly appointed FOMC Chair Jerome Powell will be kick-starting a busy week in financial markets today when he makes his first congressional testimony before the US House of Representatives. Investors will be hanging on his every word during his first major public appearance, as they look to obtain a clearer picture on both the pace and timing of interest rate hikes in the US this year. We do not expect many specific details from Powell and, while his comments are likely to remain in line with recent hawkish commentary out of the Fed, he will probably strive to maintain continuity regarding the Fed’s plan in an attempt to maintain a sense of market calm and limit volatility. Any indication that the Fed is ready to hike on four occasions in 2018, a faster pace than the market is currently pricing in, would be a significant positive for the US Dollar today. President of the European Central Bank Mario Draghi struck a fairly cautious tone during a speech on Monday, although his comments barely moved the Euro. Draghi claimed that slack in the Eurozone economy may be bigger than previously thought, which could slow the rise of inflation. This morning’s German inflation data will be the main economic data release in the Eurozone today.