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The dollar is weaker across the board in the aftermath of Powell’s speech, after the Fed chairman reaffirmed that rates would stay lower longer and the central bank was shifting to a new policy framework to ensure that this will be the case for many years to come. .
While this narrative is arguably what the market expects from the Fed in the long run, Powell’s remarks essentially bolster expectations and reaffirm that they want to win this “race to the bottom” against other central banks.
The RBNZ was quick to respond that it was also firmly in contention, and I would expect other central banks not to stay on the move either.
But essentially, there isn’t much good news for the dollar all things considered – especially when you weigh the greenback against risk and emerging market currencies in the big picture as we slowly cross the threshold. coronavirus crisis over the next few years.
For now, however, the rise in Treasury yields is certainly something that makes the trading situation a bit trickier and the risk-reducing movement in Japanese markets following Abe’s announced resignation is further complicating the situation. yen situation this week.
Amid the month-end rebalancing flows in the dollar as well, it’s gearing up for a really tricky Friday and weekend.
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