- On the second day of Jerome Powell’s testimony to Congress the Fed Chairman suggested that the central bank is getting close to the confidence it needs to start lowering interest rates. “We’re waiting to become more confident that inflation is moving sustainably at 2%” he said, adding, “When we do get that confidence – and we’re not far from it – it’ll be appropriate to begin to dial back the level of restriction.” The Chairman was again non-committal around the precise timing of the first move, repeating Wednesday’s suggestion that rates would be cut, “at some point this year.” The greenback lost ground and treasury yields dropped with traders boosting bets on a rate cut coming at the June FOMC meeting.
- As expected, the ECB held rates steady at yesterday’s policy meeting with President Christine Lagarde later suggesting that officials may be in a position to lower rates in June. New forecasts show inflation hitting the ECB’s 2% goal in 2025, however Lagarde reiterated that policymakers are not “sufficiently confident” to start cutting yet, adding, “we clearly need more evidence, more detail,”
- The dollar index fell to its lowest level in seven weeks, helping push EURUSD and GBPUSD to fresh highs ahead of today’s US Non-farm Payroll release. EURUSD has moved through recent resistance to trade as high as 1.0956 and cable is currently trading a whisker above 1.28. All eyes will be on this afternoon’s labor market report with markets looking for a print around 200k following last month’s bumper 353k release.
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