USDX continues to rise on Thanksgiving Eve, instead of profit taking. It is believed that the pandemic resurgence in Europe drags down EUR, but indirectly makes the strong USD. In addition, the Fed officials constantly announced to speed up the pace of tapering. According to the latest speech delivered by Federal Reserve Governor Christopher Waller, if inflation and employment keep increasing, the Fed should accelerate the reduction of purchasing treasury bond, being well prepared for the sooner-than-expected interest rate hike. Vice Chair of the Fed Richard Clarida also states that the body is likely to discuss about scaling down the purchase of bond fast in the next meeting, indicating more concerns about the issue among the Fed officials. If the Fed turns to be hawkish overall, it will exert an importance support for USDX.
Another key factor you should pay attention to is that Biden may release the Fed Chair nomination before the Thanksgiving Day Holiday. Earlier this week may witness more information about who will be nominated as the Fed Chair, the White House economic adviser Heather Boushey said when being interviewed, adding that as the prior factor of Biden, climate change related policy is also significant for the nomination of the Fed Chair, and as per the past performance, Brainard is the hardest Fed official who strives to promote the policy of climate change. Therefore, I believe that Barnard is more likely to be the winner and become the next Fed leader.
If Brainard wins, then more attention should be paid to the House and Senate‘s hearing attended by Brainard, where the congresspeople are expected to raise some questions based on the inflation, for instance, how to control inflation in the future？ and what measures should be taken to handle climate change？ It is estimated that she will show her determination to solve these problems. There’s no doubt that more hawkish messages will be delivered in the market, bolstering up USDX.
Leave a Reply