The Euro rose on Friday morning. Overview for 28.08.2020

EURUSD is rising at the end of the trading week. 

In late August, the major currency pair managed to overcome volatility and start rising. The current quote for the instrument is 1.1853.

So, yesterday the long-expected symposium in Jackson Hole, the USA, started with a speech delivered by the US Federal Reserve Chairman Jerome Powell, who was able to attract investors’ attention by some rather controversial comments.  For example, he told about the regulator’s new targeting strategy, which is focused on flexible average inflation rates. Actually, it may mean anything – from the Fed’s expectations that inflation may boost up to 0.5% every month and up to 3.4% by the end of 2020 to a possibility that it may plummet to zero. The Fed’s previous target has been 2% for a long time. 

At the same time, the regulator said that it didn’t have any targets for the labor market and the unemployment rate. It is quite unusual and may indicate real problems in the employment sector: the unemployment rate reduced a little bit after the coronavirus stress but it will surely not reach pre-crisis levels unless businesses and enterprises revive and create new jobs. 

Probably, from now on, the Fed’s estimation of the labor market will be based on, among other things, the real data on inflation.  

This new strategy made a lot of market players puzzled. Hopefully, the following comments the regulator and Powell himself will provide more detailed explanations but right now it looks like the Fed is really getting ready for the worst.