NY Fed's Perli: No sign yet Fed needs to change balance sheet plans

Eren Sengezer FXStreet

The Federal Reserve (Fed) remains in strong control of short-term rates and there are no signs that the Fed needs to change its balance sheet plans, Roberto Perli, the New York Fed’s head of monetary policy implementation, said on Tuesday, per Reuters.

Key quotes

"Unclear when reserves will grow scarce."

"All signs suggest reserves remain abundant."

"Money market rates will signal when reserves growing scarce."

"Fed can still do repos to add liquidity if needed."

"Confident Fed can effectively stop balance sheet drawdown smoothly."

"Standing repo, conventional repos can address stress quickly."

"Federal funds rate remains influential in money markets."

"Fed rate control tools working well amid recent challenges."

"Reverse repo facility works well, responsive to market conditions."

Market reaction

These comments failed to trigger a noticeable market reaction. As of writing, the US Dollar Index was down 0.06% on the day at 106.00.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD remains below 0.7000 amid light trading

AUD/USD fills a modest bearish gap on Monday, but remains below 0.7000 in the Asian session amid holiday-thinned liquidity. The US Dollar attempts a bounce even as US bond yields pull back from multi-year highs, limiting the pair. Moreover, diminishing odds of another RBA rate hike in November cap the Aussie.

USD/JPY hovers above 158.00 amid Japan/ US holiday

USD/JPY extends its range-bound price action into a new week, trading above 158.00 as bulls remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, softer US bond yields keep US Dollar bulls on the back foot and cap the pair's upside. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold drifts higher above $4,200 on surging ETF inflows, markets await US inflation data this week

Gold price gains ground to near $4,215 during the early Asian session on Monday. The precious metal extends the rally amid rising demand for bullion-backed exchange-traded funds and a weaker US Dollar. Yellow metal receives some support from rising investment demand, with inflows into gold-backed exchange-traded funds reaching a four-year high, according to Bloomberg data.

Week ahead: US CPI, France’s budget crisis and Q3 earnings to set the market tone

The US dollar held relatively strong this week, despite the disappointing US jobs report on October 2, which further decreased the probability of a back-to-back rate hike by the Fed at the upcoming gathering on October 28.

Middle East War updates: New attack launched on Saudi airport

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week. In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?