Fed's Barkin: Sees divided government as highly likely

Tom Barkin, the president and chief executive officer of the Richmond Federal Reserve, says spending is coming back faster than employment.

Says recent escalation in cases makes me believe we still have a ways to go.

He also says a divided government looks highly likely.

Says maybe one smaller targeted stimulus, but may see a revisiting of fiscal prudence in next months.

Says monetary policy will stay accommodative until we see the economy recover.

Says still a lot of money in people's pockets which will cushion the decline in fiscal aid.

Market implications

The prior Federal Reserve meeting has little consequence for the FX space as the concentration was elsewhere with the US election.

The next Federal Reserve meeting will be critical for markets considering the elusive fiscal stimulus package and we could see a change to QE very soon.

''Powell's focus on COVID and more fiscal stimulus needs highlights some of the tactical concern in chasing a weaker USD from current levels,'' analysts at TD Securities explained.