Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Fed Chair Powell Maintains Cautious Outlook, Dollar Slightly Stronger

Fed Chair Powell Maintains Cautious Outlook, Dollar Slightly Stronger

Izaac Brook, Brendan Fagan,
  • Powell commented on asset purchases, maintaining the current rate of $120 B per month
  • Powell’s speech comes amidst rising expectations of a strong economic recovery.
  • DXY slightly stronger in immediate trade, equity indices mixed

Fed Chair Powell speaks on the state of the economy, USD rises slightly

Federal Reserve Chair Jerome Powell painted a bleak picture for US employment during a speech given on Wednesday. In his speech, Powell outlined his commitment to remaining patiently accommodative given the weakness shown in employment data recently. “Fully realizing the benefits of a strong labor market will take continued support from both near-term policy and longer-run investments…” said Powell.

Powell continued to state that the reported unemployment number “dramatically understated” the damage done to the domestic labor market over the last twelve months. “Despite the surprising speed of recovery early on, we are still very far from a strong labor market whose benefits are broadly shared,” said Powell. While Powell remained confident that the Fed’s approach will produce satisfactory outcomes, he remained adamant that monetary policy alone will not solve our economic problems.

Powell’s cautious outlook is echoed by the fact that nearly 10 million Americans are still without work. However, Chair Powell highlighted the combination of mass vaccinations and programs such as the Paycheck Protection Program as green shoots for a recovery in retail employment. Powell also reiterated his commitment to keeping short-term interest rates near zero, while maintaining the current pace of asset purchases at $120 billion per month.

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Izaac Brook
Trading Forex News: The Strategy
Get My Guide

January’s FOMC meeting saw little change in the Fed’s policy stance. Statements from the meeting did note that the economic recovery had moderated in recent months. However, new virus cases have continued to decline since the last time the FOMC met. The vaccine rollout continues across the country, offering a light at the end of the tunnel.

Powell’s commentary comes amidst rising expectations of a strong US economic recovery. The Biden administration has opted to pass their $1.9 trillion stimulus package through the budget reconciliation process, allowing the administration to pass the stimulus package with a simple majority.

US yields and economic expectations have reacted strongly to the impending stimulus package. Yields on the 10yr Treasury rose as high as 2% in early February, hitting their highest levels since March 2020. Relatedly, 10yr inflation breakevens have risen to their highest levels since 2014, reflecting increasing expectations of higher inflation. Inflation has become a major theme amongst market commentators and politicians.

USD Forecast
USD Forecast
Recommended by Izaac Brook
Get Your Free USD Forecast
Get My Guide

DXY 1 Minute Chart

DXY Chart

Created with TradingView

S&P 500 1 Min Chart

S&P 500 Chart

Chart created with TradingView

--- Written by Brendan Fagan & Izaac Brook, DailyFX Interns

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.