Good morning,

Yesterday afternoon Fed Chair Jerome Powell testified before the House Financial Services Committee. Following the relatively hawkish rhetoric used earlier on in the week, Powell reiterated the Fed’s stance regarding inflation and the monetary policy stating “we should move away from using the term transitionary to describe inflation”. Powell also cited that the current policy was highly accommodative and allowed room for the taper to be considered. On the data front, the ADP non-farm employment figure printed positively at 534k against a previous of 525k which gives a strong indicator to the Non-Farm payroll figure this Friday. 

Elsewhere, on the continent, the single currency appeared to lose out against the dollar given the increase in demand for the greenback. The outlook for EUR remains somewhat bearish given the new concerns around the Omicron variant and also the rigid stance from the ECB regarding forward guidance on tightening of monetary policy.

Looking ahead, there is significant data releases from the US. We have the usual first Friday employment data with NFP, unemployment and average hours earnings all forecast at 553k, 4.5% and 0.4% respectively. Looking ahead to next week we have the MoM inflation figures due for the US which will be closely watched to see if the Fed’s stance is warranted.

Have a good day.

Author: Joshua Nagenthiran, Senior Relationship Manager

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