Forex Today: Powell Talks Down US Inflation

  • Jerome Powell, the Chair of the Federal Reserve, testified before Congress yesterday. He stated that the Fed is not watching specific data points to determine taper thresholds, while essentially dismissing currently high inflation as a temporary effect of the post-coronavirus shock reflation. Markets reacted little to the testimony.

Close-up Photography of Magnifying Glass


  • In the Forex market, the Canadian dollar was boosted slightly by the Bank of Canada’s announcement that it would reduce its bond purchase program. The Forex market is mostly indecisive, but currently the Japanese yen is showing the greatest short-term strength, while the British pound has the greatest short-term weakness (FXC, FXY, FXB)
  • Cryptocurrencies are mostly weak, with Bitcoin threatening to make a major bearish breakdown below $30k, while Ethereum is well established below the pivotal point at $2040. If Bitcoin breaks below $28k it will be quite likely to fall quickly to $20k or even $10k (BITCOMP, ETH-X).
  • Data released yesterday showed Chinese GDP increasing at an annualized rate of 7.9% which was roughly in line with the market’s expectation.
  • U.S. PPI data came in at a 1% increase, much higher than the expected 0.6%, continuing to stoke fears of resurgent inflation.
  • Australian employment data cam in stronger than expected, with the unemployment rate falling to 4.9% against an expected 5.1%.
  • Later today, we will get key releases of New Zealand inflation data and the Bank of Japan’s Outlook Report.
  • Last week saw a third consecutive weekly rise in global new confirmed coronavirus cases, suggesting that the pandemic is advancing again due to the spread of the more highly infectious Delta (Indian) variant.
  • It is estimated that 25.6% of the world’s population has received at least one vaccination against the novel coronavirus.
  • Total confirmed new coronavirus cases worldwide stand at over 189.1 million with an average case fatality rate of 2.15%.
  • The fastest progression in terms of immunizing a population against the coronavirus in all but the smallest states has been in Singapore, Iceland, Malta, Bermuda, Bahrain, Denmark, Finland, Mongolia, Kuwait, Bhutan, Israel, Chile, Uruguay, and Canada, which have given at least one shot to between 85% and 63% of their respective populations. However, even countries with high vaccination rates are seeing increases in new cases. For most of the world, a vaccine still remains distant.
  • The latest data suggests that coronavirus vaccines are only about 65% in effective in preventing infection by the delta (Indian) variant. There is fresh data from Israel which seem to suggest diagnosed cases of infection among vaccinated people are just as likely to require hospitalization as those among unvaccinated people.
  • The rate of new coronavirus infections appears to now be increasing most quickly in Algeria, Bangladesh, Belarus, Burma, Cuba, Cyprus, Denmark, Fiji, Finland, Georgia, Greece, Guatemala, Indonesia, Iran, Iraq, Japan, South Korea, Laos, Malaysia, Malta, Mexico, Morocco, Netherlands, Portugal, Pakistan, Russia, Senegal, Spain, and the United Kingdom.

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