Market Sentiment Remains Delicate as Fed Chair says US Economy is Extraordinarily Uncertain

The U.S. Federal Reserve Chair Jerome Powell was speaking late on Monday regarding the outlook of the world’s biggest economy and he said it is “extraordinarily uncertain”.

Powell detailed that the recovery will depend both on containing the coronavirus and on government efforts to support the recovery.

He said:

We have entered an important new phase and have done so sooner than expected. While this bounceback in economic activity is welcome, it also presents new challenges —notably, the need to keep the virus in check.

Further adding:

With output and employment still far below their pre-crisis levels, he said, “the path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed.

U.S. economic data points over the past few weeks have largely improved, demonstrating a bounce-back. However, it is important to note that this is only due to lockdown measures being eased and businesses getting back going again.

Risks remain, as cases are rising but yet reopenings are still taking place, this will at some point weigh negatively on output, in turn, data could go bad again.

What does this mean for the market?

Given the last noted point, we remain supportive of safe-haven FX; USD, JPY, CHF, with riskier FX being vulnerable; AUD NZD. Check out our membership for full trade ideas and real-time fundamental analysis.