FOMC minutes, Powell’s Testimony, Minutes of the ECB, the Fed, Negative Interest Rates, China’s National People’s Congress discussion POINTS
- The US Dollar could rise on the Powell, Mnuchin testimony to the Senate Banking committee
- The Euro may face increased of the winding-up of the pressure on the ECB challenge, policy injuries
- The Pound sterling is haunted by “brexit”, Covid-19, the BoE alluding to the negative of the rate of
POWELL TESTIMONY, FOMC MINUTES
The US Dollar could take place after Fed Chairman Jerome Powell, and the Secretary of the Treasury, Steven Mnuchin of the congress, testimony before the Senate Banking Committee on Tuesday. The recently adopted CONCERNS Act requires that quarterly updates to the Congress on the state of economic activity. This has been implemented as a way to maintain transparency and allow greater scrutiny of government.
Mr. Mnuchin, and the Chairman of the Fed will have an interesting testimony, considering the latter strongly argued in favour of a more aggressive fiscal spending, in an interview last week that the first advocated for a ” wait and see. The Secretary to the Treasury, said the White House will do what it takes to provide the material aid, but do so cautiously, emphasizing the need to allow the toy to sink in the economy, before providing more.
He also said the White House remains committed to, as well as a payroll tax cut is a future that must be relative to the bill, although the effectiveness of such a measure is uncertain considering the number of people without jobs there are out there. Some House Democrats have pushed for another stimulus package, amounting to nearly us $3 billion, but it has been met with resistance in the Senate are republicans.
In the midst of uncertainty “the fiscal tug of war” that has been embedded in an already inherently unstable the environment, the politics of ambiguity there, could push the us Dollar higher if the demand for havens rises. This dynamic can be amplified by the Jerome Powell’s reiteration of the Fed’s position against the use of negative interest rates. See his comment from last week.
ECB CHALLENGE, THE EUROPEAN COMMISSION’S POLICY RECOMMENDATIONS
On the other hand, the Euro may face increased, the pressure of the liquid in advance of the publication of the ECB, the minutes of the meeting and the publication of the European Commission’s policy recommendations for the member states. Last Friday, the central bank’s President, Christine Lagarde, said that the monetary authorities are committed to do whatever is necessary within their mandate, and will do more, if it sees that the current stimulus efforts are falling short
This happened after the preliminary euro-zone Q2 GDP data printed in the first contraction since January 2013, during what was then a regional debt crisis after the shock of the financial collapse of 2008. Policy injuries from “and then” are, without doubt, more and more aggravated now, as the underlying structural weaknesses continue to hamper growth-stimulating policies, in the amplification of intra-regional trade and political fragmentation.
This has been often shown to significantly affect the Euro, as in the case of the Italian fiscal crisis by the end of 2018 and 2019, and the resurrection of a familiar as a regional tension between the North and the South, by the year 2020. The European Commission will publish its policy recommendations to the member states. If the measures are proved to be unexpectedly strict, and the implementation of them could lead to a prolonged recession.
THE CHINA’S PEOPLE’S CONGRESS ASSEMBLES
This week, the China’s People’s Congress will assemble, albeit delayed due to the Covid-19, to discuss growth objectives for the year 2020. However, policy makers must walk a fine line, too high a growth objective, could be regarded as unrealistic, and a disappointing forecast is full of sap, and the life (The international monetary fund). The officials will also have the chance to set the u.s. President and Donald Trump’s recent grievances against China, in the middle of the pandemic.
Renewed tension between Beijing and Washington, may amplify risk aversion and helping to drive the Dollar higher, in an environment that is already in the process of a risk premium of the asset. Incendiary rhetoric from Chinese officials, could raise the prospect of targeted policy measures against China. As history has shown, Beijing will be probably in retaliation, and past market optimism can crumble at the feet of the Usd.
“BREXIT” FEARS RETURN, HAUNTING OF THE POUND STERLING
The british Pound may also face a higher-than-usual pressure to the sale, as she must face not only the erosion of the fundamental, because of the Covid-19, but the risen brexit fears. Last Friday, the head of the EU brexit negotiator, Michel Barnier, stated that he was not “optimistic” about the ongoing negotiations, while his BRITISH counterpart, David Frost echoed a similar sentiment, saying that very little progress had been made.
The politically sensitive, the Pound sterling was at the mercy, or the intense “brexit” speaks for two years, in the mid-to late deadlines, elections, emergency, summits and other forms of governmental musical chairs. This is not including the extra pressure of the hand of the reserve Bank of india, with officials there saying they are looking urgently to implement a negative-interest rate policy.
GBP/USD TECHNICAL ANALYSIS
GBP/USD has recently broken below the lowest level of 1.2156-1.2283 support the range with a follow-up, opening the door to a re-test of the word at 1.1754. This tool is second-to-last level may be the last line of support, – as – before-the GBP/USD re-testing, in 1985, to the swing low at 1.1452. Break below that with the other every day almost, could precipitate an aggressive selling in unfamiliar territory
GBP/USD – Daily Chart
The GBP/USD chart-created using TradingView
— Written by It ZabelinA Currency Analyst to DailyFX.com
To contact us Itand use the comments section below, or @ZabelinDimitriTwitter