News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Market Wire
Dollar Climbs as Biden Renominates Powell

by Karl Schamotta | November 22, 2021

The White House has announced that President Joe Biden will nominate Jerome Powell to head the Federal Reserve for a second term, keeping an experienced hand on the helm as the central bank struggles to manage rising prices and a still-nascent economic recovery.

Lael Brainard, widely considered a more dovish competitor for the top job, will succeed Richard Clarida as vice chair of the central bank’s board of governors.

Mr. Biden said, “While there’s still more to be done, we’ve made remarkable progress over the last ten months in getting Americans back to work and getting our economy moving again. That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery”. He added: “I’m confident that Chair Powell and Dr. Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make our economy stronger than ever before”.

The decision comes after months of speculation, and amid increasingly-strident criticism from across the political spectrum. Respected academics and policymakers have challenged the central bank’s stance on inflation in recent weeks, with many calling for a change in leadership. Some had expected the administration to take a different tack, pinning blame for rising prices on Powell, and nominating someone else to helm the central bank.

Powell’s nomination is nonetheless likely to meet with swift approval in the Senate – he was appointed by Donald Trump and has maintained cross-aisle support throughout his first term – but Brainard could face a more difficult path. She has remained steadfastly dovish as inflation rates have climbed, is generally more focused on labour market outcomes than her counterparts, and has expressed more draconian views on bank regulation – something that many Republicans oppose.

Treasury yields climbed and the dollar popped 0.2 percent higher after the announcement, but the decision is unlikely to signal any major changes in monetary policy. In the counter-factual, Brainard might have taken a slightly less aggressive approach to raising rates, but the Fed is ultimately a consensus-driven institution – if the bulk of the committee favour raising rates, rates will go up. We expect this morning’s reaction to fade over coming market cycles as traders take a longer-term perspective.

“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.

Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.

Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.

This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.

Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.

Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.

FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.

This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.

Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.

The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.

© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See for contact details.