Daily Market Update

Fed’s continuity welcomed by equities, dollar-bulls

November 23, 2021

The U.S. Dollar maintained its strength and added a bit to it overnight as yesterday’s announcement that Jerome Powell will remain chairman of the Federal Reserve caused a positive-dollar move.

Overview

In recent weeks, Lael Brainard had been rumored to potentially take the nomination from Powell, but the more dovish Brainard was given the nod to be Vice-Chair. Ultimately, it looks like markets are glad to see Powell a few more years, but some traders wonder how he will steer the Fed away from stimulus and manage to foment full employment.

Finally, in statements of gratitude, the head of the Fed emphasized that they are ready to help the economy in all ways possible and certainly will combat inflationary pressures from becoming incessant issues.In terms of data, we will get a look at Markit Purchasing Managers Index figures for November at 9:45 AM, which are expected to demonstrate an even higher expansion reading than October. Expect a ton of numbers tomorrow ahead of businesses taking off to observe the Thanksgiving holiday.

Worth monitoring, this morning’s headlines are focused on how the U.S. in coordination with China, India, South Korea, and the U.K. are releasing 50.0MM barrels of crude oil from its strategic reserves in order to counter OPEC+ plans to manage supplies and keep prices elevated ahead of a busy 2022.

 

What to Watch Today…

  • No major economic events scheduled for today

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EUR

The Euro remains weak and around its weakest point since the summer of 2020 after a mix of developments financially. The hawkish Fed remains a major obstacle for any Euro recovery and the difference in the application of stimulus is not helping. In recent weeks, the bond-buying through the ECB’s PEPP (Pandemic Emergency Purchase Program) was increased slightly because of the dire reality the continent faces.

Nevertheless, EU Governing Council member Francois Villeroy de Galhau made comments yesterday reiterating that there is no need to keep the PEPP program past March. Also, Euro-zone aggregate PMI figures expanded more than expected for November. We shall see if there is a comeback in the works.

 

GBP

Sterling continued its downfall based on the Fed’s continuity with Powell causing a pro-buck reaction. Additionally, there is growing concern about the economy overall among British business leaders and it seems Prime Minister Boris Johnson did not ease concerns following a much-criticized speech to the Confederation of Business Industry. In his words, Johnson managed to confuse leaders present making references to “Peppa Pig” and doing an impression of a car. All seems ‘Monty-Pythony’ on the other side of the pond.

 

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