FX.co ★ The dollar rose against the backdrop of Federal Reserve Officials speech

The entire attention of the currency markets is drawn to the speech of the incoming head of the Federal Reserve, Jerome Powell towards the US parliamentarians after Janet Yellen's resignation in February, as well as the voting results in the Senate for the United States new tax code.

Today, reports from Powell's speech were published, where he stated that he will do everything possible to achieve maximum employment and achieve inflation target level. He positively characterizes the US financial system and speaks about the need for the Fed's flexibility in responding to possible challenges. He also mentioned about the independence of the regulator and the transparency of its actions. Any additional information as Powell speaks before the Congressional deputies today, will be learned in the evening.

Meanwhile, Fed members William Dudley and Robert Kaplan who spoke with their comments supported their views on the current Fed monetary policy. President of the Federal Reserve Bank of Dallas, Robert Kaplan stressed his willingness to raise interest rates at the December meeting of the bank.

"It is likely that it will be appropriate in the near future to take a new step in the tightening of monetary policy," Kaplan said in an interview which was published by the Fed-Dallas. "This should be done in the general context of a gradual and patient abandonment of the soft policy." (DJ Newswires)

He was also actually supported by New York Fed President William Dudley, who mentioned that the Fed is "gradually winding down its soft monetary policy." In his view, "recent weak inflation data did not cause very great concern." In addition to it, he also mentioned that "a good situation in the labor market will ultimately lead to an increase in inflation." Also, he supported the candidacy of J. Powell for the position as the Federal Reserve head.

The direct opposite of Dudley and Kaplan's speeches was the comment of the President of the Federal Reserve Bank of Minneapolis N. Kashkari who said that raising interest rates is not a good idea for the stock market. He said directly that he does not support raising interest rates amid low inflation.

In general, the comments of the Fed members showed the preservation of their positions.

On Monday, the US dollar against the backdrop of a candidate's statements to the Fed leaders and its representatives was supported by the foreign exchange markets, after gaining back some portion of its losses in foreign exchange markets. Investors were so excited about the expectations of Powell, Kaplan, Dudley, and Kashkari, as well as the upcoming Senate vote on tax reform. With this, they failed to pay attention to the publication of strong data on new housing sales, as it rose sharply in October by 6.2% to 685,000 against the projected decline of 6.0% to 625,000 from the previous growth of 14.2% and 645,000.

Today, the market's focus is on the speech of J. Powell in the US Congress.

Forecast of the day:

The EURUSD pair corrected downwards, but so far has the potential for growth. If J. Powell's speech in Congress does not reveal his desire to continue following the plan on interest rate hike. On this wave, the pair can continue to grow to 1.2000. At the same time, if he adheres to the continuity of J. Yellen's course, the price is able to continue adjusting to 1.1840 after overcoming the level of 1.1875.

The USD/JPY pair is above the level of 111.00. And just like the euro, it can either grow to 112.00 or fall in Powell's words 110.70 or even 110.45.

* The presented market analysis is informative and does not constitute a guide to the transaction.