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Powell Sent the Dollar Lower. Will the August Jobs Data Bring it Back?
Federal Reserve Chairman Powell's long-anticipated speech at Jackson Hole provided fireworks but not quite what the market had expected. Confirmation of tapering was support to lift US rates and the dollar. Instead, the opposite took place, and there was a logic to it, which we drew your attention to by raising the possibility of a "dovish tapering." Powell confirmed that July minutes "revelation" that tapering could begin this year and drew a stark distinction between tapering and raising rates. Interest rates at both ends of the curve softened, and the dollar fell. The implied yield on the December 2022 Fed ... (full story)