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On January 12th, Goldman Sachs Chief Economist Jan Hatzius stated that the threat of criminal prosecution against the Federal Reserve Chairman will exacerbate market concerns about the central banks independence, but he expects the Fed to continue making policy decisions based on economic data. Speaking at the Goldman Sachs Global Strategy Conference in 2026, Hatzius said, "Clearly, concerns about a potential blow to the Feds independence are increasing, and the latest news regarding the criminal investigation of Chairman Powell has further reinforced these concerns." He added, "I have no doubt that Powell will continue to make decisions based on economic data for the remainder of his term, and will not be swayed in any direction by pressure—whether its raising or lowering interest rates, it will follow data guidance."On January 12th, ABN Amro economist Roger Quedflich stated in a report that the investigation into Federal Reserve Chairman Jerome Powell could jeopardize the Feds prospects for interest rate cuts in the near term. He pointed out that the challenge to the Feds independence could prompt Fed governors to take a hardline stance, delaying rate cut decisions to "defend the Fed." The investigation concerns cost overruns in a Fed headquarters renovation project, which Quedflich believes is seen as a means to pressure the Fed chairman and force his resignation, thereby expanding government influence. He stated, "If the situation continues to escalate, rate cuts may be postponed."On January 12th, ING FX strategist Francesco Pesole stated in a report that the dollar faces a significant risk of decline after Federal Reserve Chairman Jerome Powell announced that the Fed had received a subpoena from the U.S. Department of Justice for overspending on its headquarters renovations. He pointed out that this move has reignited market concerns about the Feds independence and could trigger another "sell-America" trade. Pesole stated, "Any further signs of interference in the Feds independence will pose a considerable downside risk to the dollar."ECB Governing Council member Mueller: There is no reason for further interest rate cuts in the short term.January 12th - According to the "Beijing Cyberspace Administration," as of January 12, 2026, Beijing has added 3 new generative artificial intelligence services that have completed registration, bringing the total number of registered generative artificial intelligence services to 212.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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