USD

The US dollar strengthened on Thursday after Jerome Powell indicated that inflation is likely to rise as the economy recovers in the coming months. Powell stated that interest rates are unlikely to rise unless the economy is running back to full capacity with full employment and more durable inflation. Powell believes that rise in the average price will not last long or be enough to change the Fed from its accommodative monetary policy.

Furthermore Powell said he did note the rise in yields did catch his attention, as have improving economic conditions. He believes that an economic recovery is on its way with the outlook looking a lot more positive. Raising interest rates, he added, would require the economy to get back to full employment and inflation to hit a sustainable level above 2%. He doesn’t expect either to happen this year. Powell went on to say, “there’s just a lot of ground to cover before we get to that,” he said. Even if the economy sees "increases in inflation, I expect that we will be patient."

Key announcements

USD -1:30 – Average hourly earnings – Forecast at 0.2% from previous 0.2%
USD – 1:30 – Non-farm employment change – Forecast at 197k from previous 49k
1:30 – USD – Unemployment rate – expected to remain unchanged at 6.3%