On April 21, Kevin Warsh, a nominee for Federal Reserve Chair, is expected to tell lawmakers during his confirmation hearing that the central bank's autonomy in setting interest rate policy is crucial, while it should also remain focused on its core objectives. According to media reports of his pre-released testimony, Warsh stated that monetary policymakers must base their decisions on "rigorous analysis, substantive deliberation, and an uninterrupted decision-making process." However, he also suggested that former President Trump's persistent calls for rate cuts do not pose a substantial threat to the Fed's independence. In his statement, Warsh will say, "When elected officials—whether the president, senators, or representatives—express their views on interest rates publicly, I do not believe the operational independence of monetary policy is fundamentally threatened. Central bank governors must have the fortitude to listen to diverse perspectives from all sides."
Additionally, Charles Scharf, CEO of Wells Fargo, stated that despite ongoing conflicts involving Iran, the U.S. economy remains "very strong." He emphasized that, given current geopolitical risks, lowering interest rates now would be "the wrong move." Scharf noted that loan demand is solid, consumer defaults are well-managed, and corporations are entering this period in good financial health. Although households are adjusting to higher gasoline prices by cutting spending in other areas, consumer spending continues to grow by 5% to 7% year-over-year. He said, "They are spending more on gasoline but are making adjustments elsewhere, which is in line with expectations."
Key data to watch today includes the UK March unemployment rate, UK February three-month average weekly earnings including bonuses, the Eurozone April ZEW Economic Sentiment Index, US March retail sales month-over-month, US March seasonally adjusted annual rate of new home sales, and the US March pending home sales index month-over-month.
Dollar Index The Dollar Index experienced a slight decline yesterday, closing marginally lower and currently trading around 98.10. Optimism surrounding potential agreements in the Middle East, which reduced safe-haven demand for the dollar, was the primary factor pressuring the index. Furthermore, dovish remarks from Federal Reserve officials during the session reignited expectations of potential rate cuts, adding to the downward pressure. Today, resistance is seen near 98.50, with support around 97.50.
EUR/USD The euro edged higher yesterday, posting a modest gain and currently trading near 1.1780. The weakening US dollar, driven by Middle East negotiation optimism and dovish Fed comments, supported the euro's rebound. However, delayed expectations for European Central Bank rate hikes limited the pair's upward movement. Resistance is anticipated near 1.1850 today, while support lies around 1.1700.
GBP/USD The British pound also climbed yesterday, recording a small increase and currently trading approximately at 1.3530. The softer US dollar, due to reduced safe-haven appeal and renewed Fed rate cut expectations, was a key factor supporting the pound's rise. Persistent expectations for Bank of England rate hikes provided additional support. Today, resistance is observed near 1.3600, with support around 1.3450.
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