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Market Review: Federal Reserve Chair Jerome Powell

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Market Review: Federal Reserve Chair Jerome Powell

Market Review: Federal Reserve Chair Jerome Powell

Economic calendar (highest volatility): 26th February – 2nd March 2018:

Timezone: (GMT -5:00) Eastern Time (U.S & Canada), Bogota, Lima


Over the previous week, generally markets continued to witness rather choppy trade for the United States Dollar (USD). While the three expected Interest Rates hikes continue to drive market expectations, the previous week’s United States Federal Open Market Committee (FOMC) Meeting Minutes did include some ‘dovish’ sounding notes specifically, on the part where the Minutes noted for a ‘gradual’ approach to policy tightening.  

The focus this week would be on The FOMC’s new Chairperson, Jerome Powell as he testifies for the first time before the House Financial Services Committee. The team at FintechFX expect him to be thrown several questions in regards to his take on American Interest Rates. The team at FintechFX expects him to not unnecessarily spook the market and to answer these questions on rather neutral grounds. However, the team also notes that he will be speaking two times this week; once during the earlier half of the week and once again after the release of the United States (U.S) 4th Quarter Annualized Gross Domestic Product (GDP). The act of him speaker after the American GDP release brings about some chance for him to make a less neutral statement if the U.S GDP figures falls heavily ahead or below expectation.


The GBP/USD can easily be crowned as one of 2018's star performer; the pair is seen to have recouped much of it's post-Brexit losses as indicated in the strong uptrend visible in the chart below. In the recent Bank of England (BoE) Interest Rate Decision meet up, the committee warned that akin to the U.S, the BoE may also raise Interest Rates faster than expected. This statement sparks some optimism for GBP/USD prices to move further upwards. In terms of country specific data for the week, markets will be scrutinizing the United Kingdom's (U.K) February 2018 Manufacturing and Construction Purchasing Managers Index (PMI) for better trading cues. In addition to this, a slew of speeches out of the United Kingdom (U.K) from both the Prime Minister and the BoE Governor is expected to bring about added market volatility for the pair. 

Formerly, the USD/CAD in regards to the chart below showed some pattern of a Wcykoff triggered sell-down. The team here at FintechFX note that the Dow Theory's 50% level is showing good indication for a continuation of a downtrend. The validity of this view has also been well tested by post the U.S FOMC Meeting Minute release and the Canadian Consumer Price Index (CPI) data which show that prices are still failing to break above the Fibonacci 61.8% level. Moreover in addition to this, the Fibonacci 61.8% level surprisingly correlates strongly with the former Wyckoff support band indicating it's further relevance as a crucial level. This week, the Canadian December 2018 GDP figures will be released well after the U.S 4th Quarter GDP indicating some valid selling opportunity if the USD/CAD continues to hover at this level. 


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Source (Economic Calendar):

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