News & Analysis
Powell comments drives USD, sinks Stocks; Gold & Oil tumble; USDCAD soars to 10-week highs.
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US markets – Powell’s first comment as FED chair made some sort of debut! The new chair signaled the central bank could hike rates more than three times this year in an effort to keep the economy from overheating, sparking anxiety among equity traders. Powell said individual Fed members will be crafting new projections at the central bank’s meeting in March, which would be influenced by federal government’s ambitious fiscal policies including tax cuts. U.S. Treasury yields rose sharply following Powell’s optimistic comments, with the benchmark 10-year Treasury note adding 5 basis points to hit 2.915 percent. Stock indices fell for the first time since Thursday last week, the Dow snapping a three-day winning streak. The Dow Jones closed 299.24 lower, the S&P500 lost 35.32 points and the NASDAQ closed 91.11 points lower.
Oil – fell last night, as the market expects to see a rise in US crude inventories. A stronger USD also pressured buyer sentiment as profits were booked after a strong three-day winning streak. OPEC’s compliance to production limits and strong demand helped to stem losses. The United States will overtake Russia as the world’s top oil producer by 2019, IEA Director Fatih Birol said. Oil closed $1.20 lower back inside the $62 handle.
European markets – closed in the red, selling started before the US session. Earnings were centre stage before the markets looked to Powell. Sky shares jumped over 20 percent on a proposed bid from Comcast. The FTSE finished 7.13 lower, the DAX lost 36.31 and the CAC closed 0.33 points lower.
Forex – the USD took centre stage last, in what was mainly a mixed session leading up to Powell’s first comments as Fed Chair. From early in the US session the USD started its move. Applying pressure to risk currencies and Gold. The EURUSD and AUDUSD lost over 60 pips. The GBPUSD declining 57 pips. Traders should keep an eye on 1.3900 (short-term) and 1.3855 low as this level has rejected sellers for a 2nd test in two days. We could see hard break if buyers fail for the 3rd time, or a low develop if the USD strength turns into a single day event! The USDCAD powered back above 1.2750 overnight, adding 100 pips. This is the highest we’ve seen the Loonie trading at for 10 weeks. Buyers testing the AUG 17 1.2775 high. The USDJPY added 41 pips, buyers were rejected once they got close to 107.70. The GBP traded flat to the JPY while the AUD and EUR finished lower.
Gold was knocked lower by the USD, losing close to $15. Sellers tested as low as 1313.41 before buyer’s regained interest. Sellers continue to look aggressive at this point in the Asian session. Price has Brocken below yesterday’s close.
USDCAD – has been a quiet achiever. We did a Forex USD report about the USDJPY and USDCAD post share meltdown. While the USDJPY failed to launch the USDCAD has been traveling quite nicely. Buyers have added 358 pips since it broke its downtrend on the 2nd of February.
Good trading from Eightcap.
Sources; CNBC. All times are AEDST
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