All About the USD – Fed’s Powell In Focus

The previous trading week ended up just like it started. Despite the Federal Open Market Committee (FOMC) Statement and the press conference that followed, the USD did not move much. In fact, the main currency pair, the EURUSD, ended the week just where it started it, at 1.1850. 

Market participants seem to avoid taking any chances ahead of the U.S. elections less than six weeks away. However, the week ahead is packed with important economic events, with the Fed’s Powell delivering a speech in four consecutive trading days.

Main Events for the Week Ahead

Fed’s Powell speech on Monday is the only important event to consider. He is scheduled to speak about rule-making for the Community Reinvestment Act. As always, when the Fed speaks, the markets listen.

On Tuesday, the same Powell testifies on the CARES act before the House Financial Services Committee. Earlier that day, Bank of England’s Governor Bailey spoke at a webinar hosted by the British Chamber of Commerce. Last week Bank of England hinted that it looks into negative rates, creating volatility on the GBP pairs, so it should come as no surprise if the same will happen this week.

New Zealand Dollar traders are on high alert this week because the Reserve Bank of New Zealand is scheduled to deliver its monetary policy. On the same day, PMIs in Europe and yet another testimony from Fed’s Powell will likely make the stock and the currency market volatile.

Thursday begins with the Swiss National Bank delivering its monetary policy assessment. The CHF has been one of the currencies that appreciated lately, despite the SNB holding the rates into negative territory. Fed Powell testifies before the Senate Banking Committing this time, and the USD traders will also be interested in what Treasury Secretary Mnuchin has to say at the same hearing.

Friday has no important events, with the exception of Durable Goods Orders in the United States. Judging by how the week is packed with speeches from the United States and two central banks deliver their monetary policy, the chances are that the volatility on the currency market will exceed the price action registered in the week ahead.

The USD consolidated for a while now against G10 currencies, with no clear direction for the entire summer. Is this week the week that brings a breakout?

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