On the foreign exchange market, the dollar index, which measures its value against 6 different foreign currencies (euro, yen, pound sterling, Swiss franc, Canadian dollar and Swedish krona) advanced 0.50% to 97.05 points. For its part, the euro fell 0.29% to $1.1361, while the pound added 0.24% to $1.2644. The dollar rebounded even more sharply against the Swiss franc (+0.7%) and the yen (+0.6%), the two currencies that had served as safe havens for two weeks in the face of stock market turbulence.
In the bond markets, the rebound in equities led to bond sales (which are also safe havens par excellence), pushing up interest rates. The yield on the 10-year US Treasury (T-Bond) rebounded 5 basis points to 2.78%.
The Trump administration mobilized on Wednesday to ease worries about a possible removal of Jerome Powell, which has caused trouble among investors. Donald Trump himself put some water in his wine, while again criticizing the rate hikes of the central bank. In addition, asked by reporters whether Jerome Powell’s position was secure, top White House economic adviser Kevin Hassett said, “Yes, of course, 100%.” To another question asking him if he could say that Powell’s post was not threatened, he said, “Absolutely.”
In the eyes of many analysts, Wednesday’s market rally remains fragile, and needs to be confirmed, because none of the underlying problems (global economic slowdown, trade tensions, “shutdown”, Brexit and political instability in Washington) have not been settled in recent days.
Markets are worried about the lack of political clarity in the United States, while some administrations have entered a “shutdown” since December 22, and that Donald Trump assures that he is ready to make the situation last for a long time if he does not get Democrats the green light to finance his cross-border wall with Mexico.