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FX.co ★ 23.02.2021: USD drifting higher ahead of Powell’s testimony (DJIA, USDX, USD/CAD, BTC/USD)

23.02.2021: USD drifting higher ahead of Powell’s testimony (DJIA, USDX, USD/CAD, BTC/USD)

Futures on the US stock indices are trading in the red. The US dollar rebounded ahead of Jerome Powell’s testimony before Congress. Bitcoin is losing ground for a second day straight.

The Dow Jones dipped 0.03%. The Nasdaq fell 1.67%. The S&P 500 is 0.48% down.

Fed’s Chairman Jerome Powell is due to testify before the banking committee of Congress today and before the financial services committee tomorrow. Market players are anticipating his remarks and outlook for the domestic economy in the face of the pandemic crisis.

Expectations for higher inflation rates as well as rising yields of US Treasuries to a one-year high affect dynamics of US stocks. Investors voice concern that the US economy will be provided with a stimulus package of a smaller size. Another cause for concern is that the Federal Reserve could tighten monetary policy.

Today the US dollar rebounded off six-week lows ahead of Jerome Powell’s keynote speech. Having risen 0.09% against a basket of major currencies, the US dollar index is trading at near 90.10 in the early New York session.

Market participants are still speculating on prospects of a large-scale relief package. A stimulus bill of 1.9 trillion dollars proposed by President Joe Biden advanced out of the House Budget Committee on Monday and is now set for a full House vote later this week.

The USD/CAD pair inched down 0.09% to trade at about 1.2609. Weak macroeconomic data from Canada is offset by elevated oil prices. Canada is notably lagging behind other advanced economies in terms of mass vaccination. Only 3.8% of the population has been already provided with the first jab. The authorities are not able to ensure steady vaccine deliveries that poses a threat to an economic recovery. For this reason, Canada’s government invested in European pharmaceutical companies to avoid the US ban on exports. However, production facilities cannot meet buoyant demand. The EU authorities announced that vaccine supplies would be subject to the export control. This measure will put obstacle in the way to the vaccination campaign in Canada.

Following an all-time record, bitcoin is trading lower for a second day in a row. In the European session today, the most popular cryptocurrency plunged 14% to trade at 48,947 dollars per token.

The slide in the bitcoin price came as a result of comments by US Treasury Secretary Janet Yellen. She stated that digital currencies could entail risks for crypto investors. Besides, she pinpointed higher volatility as another grave risk. Crypto traders view her comments as a precursor of a closer scrutiny of crypto markets by financial watchdogs.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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