Why would Jerome Powell Fed nomination be good for the US Dollar

Jerome Powell offers strong insider’s position and represents continuity
With Republican Powell, Trump will complete the Troika of top economic posts filled with pro-Wall Street nominations

Mario Blascak, PhD Independent Analyst

The US President Donald Trump is likely to pick Jerome Powell for the position of next Federal Reserve chairman this week with continuity being the most valuable feature of Powell’s nomination.

Jerome Powell is currently working as a Federal Reserve governor with 14-years long appointment ending in 2028. He is a republican, but he was appointed to Fed by democratic president Obama for supporting his views during the debt-ceiling crisis in 2011. Since 2012 he is serving in position of Fed governor being reappointed in 2014 together with Fed vice president Stanley Fisher and Fed governor Lael Brainard. Powell’s key advantage to John Taylor is that he is a Fed insider with the knowledge of processes and people forming the monetary policy decisions.

Since joining the Federal Reserve Board of Governors, Powell made only few public speeches on monetary policy and the statements mostly confirmed Yellen’s views. This is a strong argument in favor of continuity, with Fed en route to monetary policy normalization with the economic growth and employment at full capacity justifying the move even with subdued inflation.

Unlike Benjamin Bernanke and Janet Yellen, Jerome Powell lacks strong academic backround. Although there is a chance of his views being influenced by the professional staff at the Fed, on a monetary policy level he is likely to stick to the course set by Janet Yellen. And that confirms the strongest feature of Jerome Powell –the continuity.

The biggest area of difference is the financial sector regulation. While Yellen offered a rather skeptical outlook for generally pro-business and pro-Wall Street nominations of the White house, Jerome Powell, a former Wall Street banker, is unlikely to resist.

With Jerome Powell getting the nomination for Fed chairman, Trump will have in place a Wall Street Fed chairman in line with his Wall Street Treasury secretary and Wall Street Council of Economic Advisers chairman, forming complete deregulatory trio and this is the reason why Wall Street keeps breaking all-time records and the US Dollar is back on the rise.

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Blaščák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Solana extends correction despite ETF inflows, RWA adoption

Solana (SOL) price edges below $70 extending its losses for the fourth straight day this week. The institutional demand for Solana is building, with steady inflows so far this week and Morgan Stanley’s amended S-1 filing for a Solana-focused Exchange-Traded Fund.

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.