U.S. dollar extends gains as Fed chair Powell nominated for 2nd term

U.S. dollar extends gains as Fed chair Powell nominated for 2nd term

Nov 23, 2021

New York (US), November 23: The U.S. dollar further firmed up significantly in late trading on Monday as market participants expected the Federal Reserve chaired by Jerome Powell would turn more hawkish.
The dollar index, which measures the greenback against six major peers, increased 0.52 percent at 96.5379 in late trading.
U.S. President Joe Biden on Monday announced that he intends to nominate Jerome Powell for a second term as Federal Reserve chairman and to nominate Lael Brainard as vice chair.
The nomination of Powell for a second term suggests a less dovish outlook for monetary policy than under a potential Brainard leadership, said Joe Manimbo, senior market analyst at Western Union Business Solutions.
It looks like there's greater scope for U.S. rate hikes under the leadership of Powell and that has been broadly positive for the dollar, Manimbo said.
"The nomination of Powell and Brainard suggest continuity at the Fed given that they have generally been in alignment when it comes to the embrace of the new framework. However, they will face a distinctly different economy in the years ahead than in the most recent ones," said a research note by Bank of America Global Research on Monday.
The other three seats at the Fed including vice chairman of supervision remain open, likely skewing hawkish on regulations, according to Bank of America Global Research.
The yield of 10-year Treasury bonds shot up 8.08 basis points on Monday and closed at 1.630 percent, offering support for the U.S. dollar.
In late New York trading, the euro was down to 1.1233 dollars from 1.1289 dollars in the previous session, and the British pound fell to 1.3385 dollars from 1.3446 U.S. dollars in the previous session. The Australian dollar was down to 0.7225 dollar from 0.7235 dollar.
The U.S. dollar bought 114.94 Japanese yen, higher than 113.95 Japanese yen of the previous session. The U.S. dollar rose to 0.9331 Swiss franc from 0.9286 Swiss franc, and it rose to 1.2697 Canadian dollars from 1.2660 Canadian dollars.
Source: Xinhua