AMERICA:
The Federal Reserve didn't surprise. Policy was maintained, and the somber outlook and medium-term risks. Rates would remain near-zero until the central bank was confident that jobs and prices were moving toward their targets. While we had suggested that with key rates below the interest the Fed pays on reserves and the rate at which it conducts reverse repos, there was scope for a technical tweak, The FOMC chose not to make address this issue now, but it is unlikely to go away. Powell warned that the economy may require more support to ensure a robust recovery, and he explicitly played down concerns that the government was spending too much. By underscoring that the Fed was interested in ensuring markets were working, which ironically requires its assistance, rather than asset prices, Powell's seemingly innocuous comment has far-reaching implications. Contrary to speculation spurred in part by the recent op-ed piece by the former president of the Minneapolis Federal Reserve, Powell showed little inclination to adopt negative interest rates or introduce yield curve control, for that matter. This assessment also seems to imply the Fed interested in buying equities, which would require an act by Congress.
CANADA:
Canada reports February GDP. It is too dated to be of much interest, but it is expected to have expanded by 0.1%. It would lift the year-over-year rate to 2.2% from 1.8%. Mexico reports Q1 GDP. It is expected to have fallen by a little more than 1%. It would be the fifth consecutive quarter without growth. Meanwhile, the US appears to be getting ready to announce support for the oil sector. It may include bridge loans from Treasury (in exchange for equity?) and possibly an SPV program from the Federal Reserve.
The US dollar is on its lows for the month against the Canadian dollar around CAD1.3855. The next target is near CAD1.3800, the (50%) retracement of this year's greenback rally. The dollar-bloc currencies have led the move against the US dollar this month, but the Canadian dollar is the clear laggard with a roughly 1.4% gain. The New Zealand dollar is up nearly twice as much and the Australian dollar, almost five times the advance. The Mexican peso is also extending its recovery and is now roughly flat on the month. The US dollar poked above MXN25 last Friday and is now near MXN23.68. Chart support is seen MXN23.25-MXN23.30.
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The Federal Reserve didn't surprise. Policy was maintained, and the somber outlook and medium-term risks. Rates would remain near-zero until the central bank was confident that jobs and prices were moving toward their targets. While we had suggested that with key rates below the interest the Fed pays on reserves and the rate at which it conducts reverse repos, there was scope for a technical tweak, The FOMC chose not to make address this issue now, but it is unlikely to go away. Powell warned that the economy may require more support to ensure a robust recovery, and he explicitly played down concerns that the government was spending too much. By underscoring that the Fed was interested in ensuring markets were working, which ironically requires its assistance, rather than asset prices, Powell's seemingly innocuous comment has far-reaching implications. Contrary to speculation spurred in part by the recent op-ed piece by the former president of the Minneapolis Federal Reserve, Powell showed little inclination to adopt negative interest rates or introduce yield curve control, for that matter. This assessment also seems to imply the Fed interested in buying equities, which would require an act by Congress.
CANADA:
Canada reports February GDP. It is too dated to be of much interest, but it is expected to have expanded by 0.1%. It would lift the year-over-year rate to 2.2% from 1.8%. Mexico reports Q1 GDP. It is expected to have fallen by a little more than 1%. It would be the fifth consecutive quarter without growth. Meanwhile, the US appears to be getting ready to announce support for the oil sector. It may include bridge loans from Treasury (in exchange for equity?) and possibly an SPV program from the Federal Reserve.
The US dollar is on its lows for the month against the Canadian dollar around CAD1.3855. The next target is near CAD1.3800, the (50%) retracement of this year's greenback rally. The dollar-bloc currencies have led the move against the US dollar this month, but the Canadian dollar is the clear laggard with a roughly 1.4% gain. The New Zealand dollar is up nearly twice as much and the Australian dollar, almost five times the advance. The Mexican peso is also extending its recovery and is now roughly flat on the month. The US dollar poked above MXN25 last Friday and is now near MXN23.68. Chart support is seen MXN23.25-MXN23.30.
JOIN OUR ACADEMY TODAY: jameshenry252.wixsite.com/mysite