Powell is insistent on dovish attitudes instead of planning to announce the delisting despite the meeting of the Federal Reserve (Fed) last week. However, several Fed officials showed different perspectives during the previous week, indicating that the Fed should plan to start the delisting and bring interest-rate hikes forward. Owing to this situation, DXY is led to a rally to some extent. On the heels of the hawkish messages sent by Bullard (the president and CEO of the Federal Reserve Bank of St. Louis), Waller (a member of the Federal Reserve Board of Governors), and Kaplan (the 13th president and CEO of the Federal Reserve Bank of Dallas), Clarida, the present Vice Chair of the Fed, has noted that the Fed is more likely to commence the increase in interest rates in 2023, a year earlier than the widespread expectation of inception in 2024.
It is not surprising that more and more Fed officials take part in the hawkish camp. Some of them are permanent employees, while others participate in the rotation for their positions. They are different from Powell having the possibility of reappointment or dismissal after the term of office. Hence, he may keep his attitudes dovish before knowing the result, maintaining the seemingly good performance of the financial market in a bid to be reappointed by Biden.
However, the truth will come to light sooner or later. The Fed cannot evade the pressure posed by delisting and interest-rate hikes, so its officials who openly sent hawkish messages aim to inflict stress on Powell. A clash of views between the present Chair and officials has been intensified, which is rarely seen in history. In other words, most of them have been discouraged by Powell‘s incompetence, thus openly speaking out against him, a situation promoting Biden to think twice in terms of reappointment. It is estimated that the Fed will lose credibility under Powell’s leadership.
As for the USD market in the future, the unemployment rate announced by the U.S. Bureau of Labor Statistics (BLS) tonight should draw attention. If everything goes well, the financial market will believe that Powell can introduce the delisting plan in Jackson Hole at the end of August, the news conducive to the aftermarket. Apart from the U.S., there is a chance for New Zealand to increase its interest rates in the meeting on August 18th, making the NZD trend worth noticing. If the aftermarket of NZD is bullish under the context of interest-rate hikes as expected, the sale of weak AUD, i.e., NZD/AUD crosses, will be a lucrative choice. Traders taking action based on my recent comments may have enjoyed profits.
In addition, two European currencies, EUR and GBP, have seen the same case. Consequently, selling this currency pair was stressed over the past period. EUR has fallen by 3.12% and 4.6% against USD and GBP respectively since early this year, indicative of a sharper decline between EUR and GBP. It is estimated that the trend may remain, thus constituting another lucrative tactic for investors to consider.
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