Forex: the Fed will penalise the dollar

© Reuters. Market: about the Fed penalize the dollar

Friday afternoon on the foreign exchange market, the european single currency seemed set to finish the week on a rise close to 1.5% against its us counterpart. At this time, the euro was 0.18% to 1,1524 dollar, while being almost unchanged against the pound sterling, the yen and the dollar.

Schematically, and until the end of last year, the continued tightening of the monetary policy of the u.s. federal Reserve was generally considered as acquired. Whether short-term rates such as the reduction of the balance sheet of the u.s. central bank, which in a year is income of almost 4.450 billion to less than 4.060 billion to date. All elements that characterize an orientation ‘falcon’.

But, in recent weeks, while the economic outlook is troubling, various Fed officials – including its president Jerome Powell have indicated that the continuation of the normalization at a high speed, was not self-evident.

“We’re waiting and watching’, said the chairman of the Fed during a discussion at the Economic Club of Washington. He repeated, that nothing was ‘built-in’ in the number of rate increases this year. But in response to a question on the possibility of two rate increases this year, he replied that they would be conditioned to ‘very strong outlook for 2019”, detail the specialists at Aurel BGC.

Mr Powell also reiterated that the Fed could be ‘patient’ because of the weakness of inflation and expectations in the field. In a context of ‘shutdown’ persistent a good part of the federal government, due to disagreements budget between the Republicans and Democrats in Washington.

Note that in the United States, the index of consumer prices for December will be published at the time. Its increase over one year is expected to remain at 2.2 per cent, according to the consensus.


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