Powell supported the USD. Overview for 28.02.2018

The main currency pair remains under slight pressure on Wednesday morning; comments from the new Chairman of the US Federal Reserve were positive for the American currency.

At the beginning of the Wednesday trading session, EURUSD remains under slight pressure from “bears”. The current quote for the instrument is 1.2230.

The main event that took place yesterday was the speech of the new US Federal Reserve Chairman, Jerome Powell, in the Congress, as he was reporting on the regulator’s monetary policy over the last six months. In fact, Powell had to answer for his predecessor’s activity, but Yellen did nothing to be ashamed of.

In his speech, Powell was pretty active (although some thought that his rhetoric may differ from Yellen’s) and specific. He emphasized that the US economy was stable, the inflation trend was positive, and confirmed that the FOMC was ready to tighten its monetary policy. Powell sounded quite “hawkish”, which was surprising, because in the past his comments were rather soft.

At the moment, market expectations about the benchmark rate increase are the following: almost 100% in favor of the rate revision upwards in March (20^th and 21^st), 80% in favor of the rate increase in the second quarter, 70% in favor of the same in the third quarter, and, which is really surprising, 50% - in the fourth quarter 2018.

It appears that instead of three “real” revisions in 2018, which the FOMC announced several times before, there might be four. It’s a good sign for the USD and investors’ attitude to it.

In the evening, one may find interesting the second estimate of the US GDP in the fourth quarter 2017. The first estimate was rather ambiguous and may be revised from 2.6% to 2.5%. The weaker the number, the more pressure of the USD.

RoboForex Analytical Department