Daily thread to exchange ideas and to share your thoughts
The dollar is weaker across the board in the day after Powell's speech, after the Fed chair reaffirmed that rates will stay lower for longer and that the central bank is shifting to a new policy framework to ensure that will be the case for many years to come.
Although this narrative is arguably what the market expects of the Fed in the long-run, Powell's remarks basically cements expectations and reaffirms that they want to win this "race to the bottom" against other central banks.
The RBNZ has been quick to respond that they are also firmly in the running, and I would expect other central banks to not sit still moving forward as well.
But essentially, there isn't much good news for the dollar all things considered - especially when you weigh the greenback against risk and emerging market currencies in the bigger picture as we slowly move past the coronavirus crisis in the next few years.
For now though, higher Treasury yields is certainly something that is making the trading situation a little more tricky and the risk-off move in Japanese markets following Abe's reported resignation complicates the yen picture even further this week.
Amid month-end rebalancing flows in the dollar as well, it is setting up to be a really tricky Friday and end to the week.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
