USD Opens New Week Weaker – Fedspeak adds volatility on USD crosses, with Fed Governor Brainard raising rates more gradually than the median forecast as prudent, but is ready to start shrinking the balance sheet.She remains concerned that recent low price readings are due to depressed underlying inflation, which remains “well short” of its objective, and remains cautious on rate hikes accordingly. Moreover, she thinks the Fed should make it clear that it is comfortable pushing inflation “modestly above target for a time.” Dovish Brainard sees few signs of asset bubbles and feels inflation data should be closely assessed and the Fed should be confident before raising rates. This is about par for the dovish course from Brainard and yields are accordingly inert near session lows.
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