The US dollar has broken through the key resistance, it failed to cross since March so far. Riskier assets are dipping. Let’s discuss it in detail.
Fed’s Powell will report to Congress
Federal Reserve Chair Jerome Powell on June 16 at 17:00 MT time begins the first of two days of testimony. It is a really important event for traders as the prospect for the economic recovery will volatile markets.
What is the Powell’s testimony?
It is a report to Congress. His speech consists of 2 parts. The first one is the prepared statement. The second one is a question and answer session. Traders are interested more in the last one as Powell doesn’t know questions before and he may unveil some unscripted moments that add fresh market movements. This time the main focus will be on how fast the Fed thinks the USA will recover and what measures the Fed will offer to support economy.
What to expect?
Analysts widely anticipate the upcoming Fed’s message will echo the pessimistic outlook Jerome Powell gave last week. After that negative prospect the market sentiment hugely deteriorated. It may happen again today. Today’s meeting even becomes a political issue. Democrats are pushing for further fiscal stimulus, while Republicans are against it as the US May jobs report was encouraging. Jerome Powell doesn’t want to enter the political fight. That’s why it’s more intriguing today to watch which side will be right.
What does it mean for a trader?
If the tone of Powell’s speech is dire and prospects are grim, safe-haven assets such as USD and gold will gain.
Otherwise, if Jerome Powell is optimistic (what’s less possible), stocks and riskier currencies will rise.
China's industrial rebound, progress in US fiscal stimulus and other important news in this article.
The market sentiment is mixed as investors weigh US stimulus package against the rising infections and worse-than-expected US unemployment claims. Jump in for fresh analysis of EUR/USD, USD/JPY, S&P 500 and gold!
US Initial jobless claims will be announced on Thursday at 15:30 MT time.