Barkin stressed Fed's data-dependent approach; USDIDX extend gains by 0.50% 💵

We have just received details of statements made by two FOMC representatives - Thomas Barkin from the Richmond Fed and Governor Christopher Waller. Later today, Kashkari from Minneapolis and Harker from Philadelphia will also be giving interviews.

Richmond Fed President Thomas Barkin emphasized the Fed's readiness to adjust policy based on economic signals, highlighting the recent interest rate cut to 4.50%-4.75% and focusing on potential risks to inflation or employment. Meanwhile, Fed Governor Christopher Waller did not comment on Fed monetary policy or the U.S. economy.

Thomas Barkin (Richmond Fed President):

• Fed ready to adapt policy based on economic signals, as inflation nears 2% and labor market remains resilient.
• Recent rate cut to 4.50%-4.75% marks a move to less restrictive policy.
• Fed’s future response will depend on business sentiment, consumer demand, and overall economic conditions.
• Focus areas: potential inflation risks or employment downturns.
• Market estimates a 65% chance of a December rate cut.

Christopher Waller (Fed Governor) - no comments on economy & monetary policy:

• Advocated for private sector-led innovation in payment systems, minimizing government intervention.
• Fed supports private sector innovation through operational infrastructure like the FedNow system.
• Emphasized that government intervention in payments should address clear market inefficiencies.
• Expressed skepticism over the need for a Fed digital dollar (CBDC), citing a lack of compelling justification.

USDIDX (D1)

The dollar index continues today’s so-called Trump Trade that began even before the elections. The dollar index gains 0.50% to reach 105.9000 points - its highest level since April this year. It is worth noting that, at that time, interest rates were 75 basis points higher than they are now, and the Fed is still in the midst of a monetary easing cycle. As evident, the significant victory of the Republican Party in the U.S. elections has had a substantial impact on the Forex market, even though theoretically, the change of power will not take place until January of the following year, and no actual actions have been taken so far.

From a technical analysis perspective, USDIDX is approaching the important 106-point level, which over the last two years of consolidation has only been tested briefly.

Source: xStation 5