The replacement for Janet Yellen as the Fed chair is Jerome Powell and he conducted a speech on Tuesday at the Banking Committee of the Senate. Powell signaled for the continuity of the regulator's course after he takeover the office next year, February 2018.
Prior Powell's speech takes place in the Banking Committee of the Senate, he already confirmed about the continuity of the present course of the Fed.
"I will follow the path of my predecessors, not thinking about political consequences," assured Powell (Dow Jones Newswires).
In addition, he said that he considered a reasonable smooth increase of interest rates because of the possible overheating of the economy. "Very low interest rates are more out of place," said Dow Jones Newswires.
Moreover, he mentioned that it is necessary to continue following the course of balance reduction, which, in his opinion, will decrease 3-4 years to an acceptable level. Making it clear that his monetary policy decisions will be based on the incoming data of economic statistics. Regarding the Fed's decision to raise interest rates again at the December meeting, he believes that this the right decision so he backed it up.
Evaluating the speech of the new head of the US Federal Reserve it can be considered generally harmonious with the current prospect perspective of the Federal Reserve and completely fits into its paradigm.
On the wave of J. Powell's speech, the US dollar gained support on Tuesday against major currencies. This was also promoted by the positive data from the Conference Board, which demonstrated growth on consumer confidence in November gaining 129.5 points against the value of 126.2 points in October. The growth of the indicator was the strongest in the last 17 years.
The productive activity index from the Federal Reserve Bank of Richmond was also good. The indicator added up to 30 points against 12 in October and the growth forecast is 14 points.
Estimating the possible dynamics for today, it is assumed that the dollar can continue to grow on the wave of already strong GDP data, as well as the value of the unfinished sales index in the real estate market. Also, the positive portion of his speech and Yellen's added to the growth.
Forecast of the day:
The EUR/USD pair is falling on the wave of J. Powell's program speech in the Senate Banking Committee, which confirms the continuity of the Fed's course. The support of the dollar is also provided by the positive statistics from the CB. On this wave, if the GDP data will be positive for today, we should expect the pair to continue falling to 1.1795.
The USD/JPY pair has the potential to continue growing to 112.00 after overcoming the level of 111.60 if the US data is proven strong.
* The presented market analysis is informative and does not constitute a guide to the transaction.
