Last night's speech by Jerome Powell, chairman of the US Federal Reserve, was one of the key events of the day. Investors were expecting clues about further changes in US interest rates, and they got them. Powell sounded more dovish.
During his speech at the Brookings Institute, Jerome Powell signaled that the Fed may slow the pace of interest rate hikes in December, "the time for a moderate pace of rate hikes may come as early as the December meeting," - Powell said, while adding that it is likely "that restoring price stability will require maintaining policy at restrictive levels for some time." In addition, Powell added that historically premature policy easing has been strongly discouraged. "We will stay the course until the job is done," he said. - he concluded. Federal Reserve Chairman Jerome Powell also said that he "doesn't want to over-tighten" interest rates, as the central bank doesn't see fit to "crash the economy and clean up after it." Nevertheless, answering questions at a session organized by the Brookings Institute, Powell stressed that "cutting rates is not something I want to do anytime soon," the BBN service concludes. This was the Fed chairman's last public appearance before the December interest rate decision.
Source: Conotoxia MT5, USDIndex, Daily
Markets in a little euphoria
The U.S. Nasdaq index hit its highest level in 10 weeks yesterday, the AUD/USD pair rate hit its highest level in 11 weeks, NZD/USD rose to levels seen 2.5 months ago, gold reached its highest level in 2 weeks, and the dollar index fell in November in percentage terms by the strongest amount since 2010. This reaction of the markets seems to show quite well how high investors' hopes were placed on Powell's speech, and that they were not disappointed. In addition to Powell's speech, events from China may also provide support for the markets. Investors may be pleased with China's softening stance on Covid. The top official in charge of tight restrictions on the Covid outbreak said the country's fight against the virus is entering a new phase amid a waning omicron variant, rising vaccination rates and broader experience in preventing Covid.
Source: Conotoxia MT5, US100, H4
What's next ahead?
After the Fed chairman's speech, it seems that the key for the markets may be Friday and data from the US labor market. It is in it that high hopes may be placed to resist the economic slowdown. However, if the labor market situation began to deteriorate as well, the Fed could face a difficult choice. Which to fight? With inflation or with the deterioration in US employment. That is what we will find out tomorrow.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
