Interbank Market News Scan: Powell to deliver testimony before Congress on monetary policy …

14 July 2021

Federal Reserve chairman today speaks on state of monetary policy.

Federal Reserve Board chairman Jerome Powell today will share with Congress his outlook on monetary policy as the United States economy continues to pull itself out of the economic doldrums imposed on it by the Covid-19 pandemic.  Mr Powell will share his observation that as the American economy continues to move toward levels of pre-pandemic economic performance, it will climb through transitory periods of inflation.  Increases in consumer prices may primarily be due to restraints on supply due in part to stressed supply chains.

Mr Powell will testify that the Federal Reserve is still focused on its long-term inflation goal of two percent.  Mr Powell will also note that asset valuations are increasing which in turn is feeding risk appetite amongst investors.  Mr Powell will also advise Congress that the Federal Reserve will continue to maintain its current policy of purchasing Treasury securities and agency mortgage-backed securities currently amounting to $120 billion per month until labor market and other economic factors such as stable prices improve.

Mr Powell’s semi-annual monetary policy report to Congress is submitted pursuant to Section 2B of the Federal Reserve Act. The monetary policy report did not go into any detail regarding international trade or exchange rates.

For a consultation on any regulatory or legislative discussions or announcements during today’s hearing, please reach out to us at altondrew@altondrew.com to reserve an appointment.

Exchange rates of interest as of 12:15 pm AST

Currency pairExchange rate
AUD/USD*0.7478
EUR/USD*1.1819
GBP/USD*1.3879
USD/CAD*1.2454
USD/CHF*0.9163
USD/JPY*110.1200
USD/XCD+2.7000
USD/NGN+410.3770
USD/MXN*19.9560
Sources: *Reuters +OANDA

Rates reported by the Federal Reserve (Release Date 13 July 2021)

Effective Fed Funds Rate: 0.10%

Discount Window:  0.25%

Prime Bank Rate: 3.25%

3-month Treasury bill: 0.05%

6-month Treasury bill: 0.06%

1-year Treasury bill: 0.07%

As of 5:51 pm AST, foreign exchange rates as Congress ponders additional relief …

Pairs Federal Reserve as of 23 December 2020 OANDA as of 23 December 2020 OANDA as of 28 December 2020 
GBP/USD 1.3510 1.3449 1.35603 
USD/CAD 1.2841 1.2872 1.28619 
USD/CNH 6.5400 6.5323 6.51546 
USD/DKK 6.0989 6.1031 6.10186 
EUR/USD 1.2194 1.2185 1.21836 
USD/INR 73.7700 73.7316 73.4122 
USD/MXN 20.0800 20.0878 19.8603 
USD/JPY 103.5200 103.50 103.63 
USD/NOK 8.6307 8.6886 8.62746 
USD/SEK 8.2841 8.3036 8.24517 
USD/CHF .8882 .8886 .89037 

Source: Board of Governors of the Federal Reserve, OANDA

Legal/Political Events Impacting Foreign Exchange Rates

U.S. House considers increasing dollar amount of pandemic relief payments to taxpayers

The U.S. House of Representatives is, at the time of this writing, considering a vote to increase the amount of pandemic relief to individual taxpayers from the current $600 to $2,000. President Trump and House Democrats are aligned on this issue, but the increase is expected to face considerable push back in the Republican controlled U.S. Senate. Mr Trump argued yesterday that the pandemic relief passed by Congress over the weekend contained unnecessary spending and argued that these funds be reallocated to American taxpayers.

Source: U.S. House of Representatives

As of 1:12 pm AST, foreign exchange rates in reaction to Trump signing pandemic relief bill …

Pairs Federal Reserve as of 18 December 2020 OANDA as of 18 December 2020 OANDA as of 28 December 2020 
GBP/USD 1.3497 1.3520 1.35603 
USD/CAD 1.2776 1.2760 1.28619 
USD/CNH 6.5395 6.5197 6.51546 
USD/DKK 6.0798 6.0731 6.10186 
EUR/USD 1.2236 1.2248 1.21836 
USD/INR 73.5300 73.4139 73.4122 
USD/MXN 19.9813 19.8978 19.8603 
USD/JPY 103.3500 103.35 103.63 
USD/NOK 8.5959 8.5878 8.62746 
USD/SEK 8.2786 8.2747 8.24517 
USD/CHF .8850 .8844 .89037 

Legal/Political Event Impacting Foreign Exchange Rates

Trump signs pandemic relief package

Yesterday, President Donald J Trump reluctantly signed into law a $900 billion pandemic relief package with a core provision of a $600 payment to eligible taxpayers. Mr Trump advocated for increasing the payout from $600 to $2,000 for eligible taxpayer. In his statement Mr Trump promised to continue his fight for the increase as the Democratic-controlled House is expected to vote today on increasing the amount. Resistance to an increase is expected in the Republican-controlled Senate.

Foreign exchange rates; Pandemic stimulus bill passes Congress

Pairs Federal Reserve as of 18 December 2020 OANDA as of 21 December 2020 
GBP/USD 1.3497 1.33499 
USD/CAD 1.2776 1.28559 
USD/CNH 6.5395 6.53668 
USD/DKK 6.0798 6.09401 
EUR/USD 1.2236 1.22056 
USD/INR 73.5300 73.7333 
USD/MXN 19.9813 20.1582 
USD/JPY 103.3500 103.4600 
USD/NOK 8.5959 8.6862 
USD/SEK 8.2786 8.2959 
USD/CHF .8850 .8865 
Sources: Federal Reserve and OANDA

Legal/Political news impacting foreign exchange

Congress passes $900 billion relief package

Reuters reporting that the United States Senate has passed a $900 billion coronavirus relief package which includes a one-time $600 payment to eligible American taxpayers. President Donald Trump is expected to sign the legislation later today.