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In a batch of comments reported by Reuters, Boston Fed President Eric Rosengren said that the labour market could be stagnant for the next couple of months until we have much more widespread vaccinations. Moreover, he said that the economy could face significant weakness in the near term as virus infections and hospitalizations rise.

However, Rosengren noted that the arrival of effective vaccines and outlook for more fiscal support are positive longer-run tailwinds. A fiscal program that provides grants to struggling businesses might be the best way to provide support, he advised.

Market Impact

The comments, which did not touch on Fed policy at all, have not had any meaningful impact on the US dollar. The Dollar Index (DXY) has flatlined in recent trade in the 90.30s. Much more meaningful for the buck will be incoming US President Joe Biden’s fiscal stimulus plan, set to be announced on Thursday, as well as a speech from Fed Chair Jerome Powell.