Fed Chairman Powell Insists on Extension of Emergency Credit Programs 

On Tuesday, Federal Reserve Chairman Jerome Powell says its not yet time to stop the emergency credit programs amidst rising of Covid-19 cases and the economy left with “a long way to go” recover. 

“I don’t think it is time yet, or very soon,” says Powell regarding the shutting of emergency program that is set up by the Fed last spring with the authorization of the Treasury Department and funding from Congress, Powell said in the clearest indication yet he feels the programs are likely needed beyond Dec. 31, when many are due to expire. 

However, in extending the program, it requires the approval of the Treasury under the old Trump administration. Some Republicans in the Congress have talked about keeping it open, particularly the program of lending for local governments. 

Although positive news about the coronavirus vaccines are in sight, the next few months could still be “challenging” the Fed chief said at a virtual event hosted by the Bay Area Council in California. 

Short-term risks are highlighted in October with weak U.S. retail sales. Atlanta Fed President Raphael Bostic said in a separate appearance, raising concerns on families running out short on cash due to layoffs from work, while a resurging coronavirus have affected shopping stores which may lead to closures. 

The United States now has over a million coronavirus weekly, the fast growth of viruses is taxing hospitals and has spurred once-reluctant Republican state governors to re-impose the wearing of masks strictly and other restrictions that are needed. 

The Fed is committed to “using all of our tools to support the recovery for as long as it takes until the job is well and truly done,” Powell said. 

Powell repeated calls to the congress for more fiscal support to aid families until a vaccine is broadly developed. The current rise in Covid-19 cases and hospitalizations is much a concern because it will scare people to engaged in economical activities which will further slow economic growth, Powell said. 

There have been no new fiscal support programs since the first round of fiscal relief in March. 

Powell said that the positive trials in the COVID-19 vaccines is certainly good in the medium term, but he noted that in the best case they won’t be widely available for months ahead. 

“With the virus now spreading at a fast rate, the next few months will be very challenging,” he said.  

Technical Outlook 

In the daily charts of GBP/USD, the pair edged higher early Wednesday morning in Sydney session. 

As what we can see in the chart, the pair continued to surge up from the support level at 1.31966. With Brexit hopes in the center of the news in UK, the sterling is picking up positive sentiment from investors. Meanwhile, in the United States, the dollar is depreciating due to stagnant economic activities brought by increasing number of Covid-19 cases. 

A deal between EU and UK may further boost sterling’s outlook and may continue to surge and test the resistance level at 1.34872 or may breakout from the level and test fresh highs. However, a no-deal may hurt the sterling and the price may break down from the support level at 1.31966 and re-test the next support at 1.28685. 

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