The dollar index fell Monday evening 0.21% to 97.80 points, after a decline of 0.5% last week. The euro rose 0.22% to $1.1075, supported by signs that the European economy has bottomed out and could start moving forward in 2020. Germany, in particular, has avoided just the recession in the 3rd quarter with growth of 0.1% (against -0.2% expected) after a decline of 0.2% in the 2nd quarter.
In the US bond markets, prices rose Monday, causing a slight easing rates, which move in the opposite direction of prices. The yield on the 10-year T-Bond dropped 2 basis points to 1.81%. That rate had fallen to 1.53% a month ago, amid fears of a recession, before rebounding sharply thanks to the easing on the trade front, and after the Fed signaled a pause in its bearish cycle.
Monetary policy was on the agenda of a meeting Monday between Donald Trump and Fed Chairman Jerome Powell. The meeting, the first between the two men since last July, took place at the request of the president, at the White House, in the presence of Secretary of the Treasury Steven Mnuchin.
In a tweet, Donald Trump said that “everything was approached” during this interview, “including interest rates, negative interest rates, low inflation, easing, the strength of the Dollar & its impact on the manufacturing industry, trade with China, the EU & with others “. Donald Trump called the interview “good and cordial”, without indulging once again in harsh criticism of the Fed, which it regularly accuses of having lowered its rates too late and too little.
For its part, the Fed said Monday that Jerome Powell had made no commitment or made promises on the next actions of the Fed, during this meeting with Trump. The meeting between Trump, Powell and Mnuchin focused on “the economy, growth, jobs and inflation,” the Fed said in a statement. The Fed boss said monetary policy “would depend entirely on information based on the economic outlook” of the United States, the Fed added.
Faced with the US Congress, Jerome Powell repeated last week the willingness of the Fed to pause on key rates, after making three declines since July to return between 1.50 and 1.75% on the rate of fed funds “. Mr. Powell painted a rather flattering portrait of the US economy, which should continue to grow at a moderate pace in a sustainable manner. However, he highlighted risk factors, including the US trade war and growing indebtedness, which is expected to exceed $1 trillion in 2020 for the first time since 2012.