Foreign exchange rates in light of Mnuchin, Powell testimony before the US Senate …

As of  11:23 am AST, 1 December 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .77051 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.29766 CAD

CAD/USD=0.77051   USD/CAD=1.29766

CNH/USD= 0.15204   USD/CNH=6.57584

EUR/USD= 1.19642   USD/EUR=0.83573

DKK/USD =0.16075   USD/DKK=6.21944

NGN/USD= 0.00261    USD/NGN=378.336

JPY/USD=0.00960    USD/JPY=104.12

INR/USD=0.01351       USD/INR=73.8918

JMD/USD=0.00675     USD/JMD=145.028

GYD/USD=0.00469       USD/GYD= 205.043

GHS/USD=0.17028    USD/GHS= 5.82869

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00900       USD/KES= 109.047

BTC/USD= 16,987.20    USD/BTC= 0.00006

Source: OANDA

Major political/legal events impacting currencies

Today, Steven Mnuchin, Secretary of the U.S. Department of the Treasury, and Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System, are testifying before the U.S. Senate Committee on Banking, Housing and Urban Affairs.  Questions are expected to seek clarification as to Secretary Mnuchin’s request that remaining funds from the CARES Act be sent back to the Congress’ general fund.  Chairman Powell will reiterate the need for fiscal policy in the face of increasing COVID-19 infections and an economy that is still on the rebound.  

Source: U.S. Senate Committee on Banking, Housing and Urban Affairs

Long term yields tick up in anticipation of Powell, Mnuchin testimony …

As of 10:27 am AST 1 December 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .08%

6-month: .09%

12-month: .10%

2-year: .16%

10-year: .88%

30-year: 1.62%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major political/legal events impacting currencies

Today, Steven Mnuchin, Secretary of the U.S. Department of the Treasury, and Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System, will testify before the U.S. Senate Committee on Banking, Housing and Urban Affairs.  Questions are expected to seek clarification as to Secretary Mnuchin’s request that remaining funds from the CARES Act be sent back to the Congress’ general fund.  Chairman Powell will reiterate the need for fiscal policy in the face of increasing COVID-19 infections and an economy that is still on the rebound.  

Source: U.S. Senate Committee on Banking, Housing and Urban Affairs

Of banks and the politics of coronavirus support …

Politics of banking

Earlier today, the chairman of the U.S. House of Representatives Select Sub-committee on the Coronavirus Crisis, James Clyburn, Democrat of South Carolina, sent a letter to Steven Mnuchin, Secretary of the United States Department of the Treasury, and Jovita Carranza, Administrator of the Small Business Administration, requesting that Treasury and the SBA take steps to ensure that $130 billion remaining under the Paycheck Protection Program and Health Care Enhancement Act (PPP) are allocated to businesses truly in need and that both agencies increase the level of transparency about the recipients of funds that have already been expended.

According to the letter sent by Chairman Clyburn, Congress is concerned that with no clear guidance issued by either the Treasury Department or the SBA, larger businesses that already had lending relationships with banks that distributed the funding, would be first in line for the lion share of funds.  It was partly due to this fear that Congress followed up the Coronavirus Aid, Relief and Economic Security Act (CARES Act) with the Paycheck Protection Program and Health Care Enhancement Act, which provided an additional $310 billion in funding and set aside $60 billion to be distributed by community lenders with a track record for lending money to smaller borrowers.

The political controversy surrounding the support program is spawned by Chairman Clyburn’s that banks release the names of all recipients of paycheck protection program funding.  Republicans apparently have not signed off on this request given the lack of Republican signatures on Chairman Clyburn’s letter.  In addition, Secretary Mnuchin has referred to the requested information as proprietary, a description that Chairman Clyburn does not agree with.

The issue appears more a political one than a market one.  Neither demand or supply for these funds are the result of economic interaction between the seeker of loanable funds and provider but more the result of government imposed shutdowns, and the resulting slowdown in the economy as social distancing and quarantines have reduced foot traffic in restaurants, stores, and automobile showrooms to a halt and in a number of cases has caused businesses to seek bankruptcy protection.

The big banks, including J.P. Morgan Chase, Bank of America, Truist, Citibank, and Wells Fargo have been called out by critics for hooking up larger businesses with more established relationships versus the mom and pop with ten employees on the verge of shut down.

But as Paul Miller of Miller & Co. LLP shared in a post on BloombergTax.com, there are alternative sources of funding for small businesses out there.  They include:

  • The Employee Retention Credit;
  • Local and state coronavirus resources (see http://www.fundera.com);
  • Crowd-funding;
  • Venture capital; and
  • Traditional lines of credit.