Fed's Kaplan: US economy could grow next year by approximately 3.5%

Ross J Burland FXStreet

Dallas Federal Reserve President Robert Kaplan said on Wednesday that economic activity is shifting during the pandemic to sectors that do not rely on face-to-face interaction, and Americans most affected by job losses will need help getting back to work.

Kaplan said during a virtual discussion organized by the Dallas Fed that People in the industries hardest hit during the pandemic, including women and minorities, will need training, child care and other resources to return to the labour force,

''The US economy is likely to contract by about 2.5% in 2020 and could grow next year by approximately 3.5%'', he said.

Dollar implications

The market has priced much of this sort of rhetoric in already and the greenback could be on the verge of staging a recovery according to the following technical analysis:

Bullish Reverse Head & Shoulders?

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD consolidates gains above 1.1400

Following an earlier move to multi-day peaks past 1.1460, EUR/USD has now slipped back toward the low 1.1400s as the NA session draws to a close on Tuesday. Declining bets for potential Fed tightening later in the year coupled with poor US CPI data hurt the US Dollar, lending fresh legs to the pair and the broader risk-linked universe. Moving forward, the release of US PPI and Chair Warsh’s second testumony should keep investors entertained on Wednesday.

Gold climbs to near $4,050 on softer US CPI

Gold price rises to around $4,050 during the early Asian session on Wednesday. The precious metal rebounds as softer-than-expected US inflation data boosted hopes of the US Federal ‌Reserve adopting a less hawkish stance.

Ethereum climbs 7% amid declining inflation, weak retail and whale participation

Ethereum jumped more than 7% above $1,850 on Tuesday following a weaker-than-expected US Consumer Price Index report for June. The inflation data fell to 3.5% below expectations of 3.8%, marking a month-on-month decline of 0.4%, its largest monthly drop since May 2020. Core CPI also fell to 2.6% below forecasts of 2.8%.

Fed Chair Warsh reaffirms they will deliver price stability

While testifying on the Semiannual Monetary Policy Report before the US House Financial Services Committee, Fed Chairman Kevin Warsh reiterated that the Fed is making a commitment on price stability and the goal of 2% inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.