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Nov 30 - 01:55 PM

EUR/USD - REFILE-BUZZ-COMMENT-Powell's Jobs Comment Might Be Bigger For EUR/USD Than "transitory" Issue

By Christopher Romano  —  Nov 30 - 11:40 AM

Corrects typo in headline

EUR/USD rallied to a high of 1.1387 on EBS on Tuesday but stalled short of the 21-day moving average when gains were quickly reversed on Fed Chair Jerome Powell's testimony to the Senate Banking Committee, particularly comments on "transitory" inflation but also on jobs.

Powell said the risk of higher inflation has increased nW1N2QN01J and that it was a good time to retire the Fed's "transitory" description of inflation nS0N2O402E.
His inflation comments got the attention of investors, but his comments about labor may have had a greater impact.

Powell said it was very surprising that labor force participation has moved sideways and that it will take longer to get labor force participation back.

Powell's comment that the labor recovery could take longer than expected might be a sign the Fed will make rate hikes less contingent on employment fully recovering and be more attuned to rising inflation.

U.S.
interest rates rallied sharply on the comments.
The 10-year yield US10YT=RR rallied toward the 200-DMA, June 2022 eurodollars EDM2 gave up all the session's gains and German-U.S.
2-year yield spreads erased earlier tightening and moved further in the dollar's favor.

EUR/USD gave up earlier gains, turned negative and fell below the 10-DMA.
Should U.S. rates continue their rise a break of November's low is likely.

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Source:
Refinitiv IFR Research/Market Commentary

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