Powell keeps pressure on the dollar, Bitcoin consolidates, jobless claims eyed

Markets have taken a pause in their rises and the dollar from its decline. Fed Chair Powell wants the US to reach full employment ahead of jobless claims and as inflation remains low. The New Year holiday in China has been partially responsible for subdued trading, which is set to pick up later.

Jerome Powell, Chairman of the Federal Reserve, spoke on Wednesday and reiterated his commitment to providing support to the economy, stressing that the job market needs to return to full employment. Powell stated that the Fed will not tighten policy solely in response to an improvement in the labor market. The Fed Chair also downplayed inflation, which came out at 1.4% yearly in January, lower than expected.

Powell’s comments and weak inflation sent investors to buying stocks, lowering yields but only marginally impacting the dollar. Gold prices are off their highs above $1,850.

Lisa Cook, an economist who is considered a dove, will reportedly be nominated to the Federal Reserve’s boar.

Weekly jobless claims are due out on Thursday and are expected to show an ongoing decline. Nevertheless, applications remain at elevated levels.

Stimulus: Washington remains consumed by the trial of former President Donald Trump, pushing discussions about fiscal stimulus to the background. Some expect a drive to pass the relief bill, of unknown size, in the last week of February.

President Joe Biden spoke with his Chinese counterpart Xi Jinping and both reportedly discussed various known points of contention such as Beijing’s economic practices, human rights, the climate, and more. There were no outstanding headlines to move markets, but the White House is set to conduct a review of relations between the world’s largest economies.

UK: Prime Minister Boris Johnson lowered expectations about foreign summer holidays amid ongoing uncertainty about the virus and despite the UK vaccinating some 20% of its population. On the Brexit front, the EU has pushed back the date for ratifying its accord.

In Europe, Germany extended its lockdown as coronavirus cases remain stubbornly high. The old continent is trying to reignite its sluggish vaccination campaign. EUR/USD is holding above 1.21 ahead of the EU’s publication of new economic forecasts.

Bitcoin has been extending its downside correction and trades at around $45,000 after hitting record highs near $48,000. Elon Musk, who announced that his company Tesla would invest in BTC, returned to tweeting about Dogecoin. US Treasury Secretary Janet Yellen warned of the misuse of cryptocurrencies for illicit activities. On the other hand, Mastercard will support selected digital coins on its network.

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