Fed Chair Powell reassures markets, driving interest rates and the dollar higher

Fed Chair Powell reassures markets, driving interest rates and the dollar higher

The US dollar found bids after yesterday’s testimony by Fed Chair Powell. His semi-annual appearance before Congress featured an unwavering commitment to low interest rates and quantitative easing until the US economy is on a solid growth path. The UK pound also rose this morning as financial markets bet the UK economy will outperform its European neighbors in an economic revival. Safe-haven Japanese yen and Swiss franc both sold-off for a third day.

“The best preparation for tomorrow is doing your best today.”

H. Jackson Brown, Jr
  • FX Rates
    February 24, 2021

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    The dollar continued gains this morning vs. most currencies save the UK pound and Canadian dollar. Following Fed Chair Powell’s comments yesterday the financial markets gave back some of the risk aversion which had led to a recent sell-off in tech stocks. Investors now see the spike in 10-year US Treasury yields as evidence the economy will return to full strength soon and not as a harbinger of a drastic rise in inflation.

    GBP

    The pound rocketed above $1.42 overnight on continued optimism that the UK economy will reopen in full by mid-June following Prime Minister Johnson’s timetable announcement over the weekend.

    EUR

    The euro gave up earlier gains mostly on overall US dollar bullishness. FX traders also sold the euro in favor of the surging UK pound. The euro has fallen 4% vs. the pound since the start of 2021, showing the UK achievements in providing a vaccine to more of its population.

    CAD

    The Canadian dollar is flat this morning after the price of oil leveled off. Oil production in the US is coming back online after last week's freeze in Texas resulting in an increase in inventories which had fallen precipitously. The loonie is expected to continue gains if OPEC refrains from increasing production at its meeting next week.

    ASIA/PACIFIC

    The Japanese yen lost ground for 3 consecutive days and briefly traded over 106. The safe-havens yen and Swiss franc have both been losing ground as risk aversion fades.  

    The Australian dollar held onto gains, which has seen the currency rise almost 4% vs. the US dollar since early February. Commodity prices remain well bid on hopes of a stronger global economy, helping currencies like the A-dollar and the Canadian dollar.

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Peter Compton
WRITTEN BY
Peter Compton

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