Markets Stay Calm Waiting for Hints From Fed’s New Chair
Markets remain calm in anticipation of the speech of the new chairman of the Fed, Jerome Powell. The US dollar is recovering slightly after the fall. The Canadian dollar is the weakest due to uncertainty regarding the revision of the NAFTA deal. The British pound trades as the strongest major currency. British Prime Minister Theresa May intends to deliver a speech on Friday, and to discuss further relations with the EU after Brexit.
Investors turned their attention to Jerome Powell's congressional testimony on monetary policy and the economy, before the House on Tuesday, followed by testimony to the Senate on Thursday. Powell is expected to keep the gradual path of monetary policy normalization. The Fed released its semi-annual Monetary Policy Report last Friday. The report noted that "with inflation having persistently run below the 2% longer-run objective the Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal". It appears that similar reference had not been revealed in previous FOMC statement or minutes.
German Chancellor Angela Merkel appealed to fellow members of her Christian Democratic Union to back a coalition agreement with center-left Social Democrats, insisting that the new government would not allow new taxes or new public debt. Merkel also underscored the need to rejuvenate the European Union, saying Europe needed to be a true player in global affairs to be taken seriously.