The US dollar has surged to levels unseen since April after the Fed's decision back on Wednesday. Gold has reversed up from the local dips. Still, this week was the worst for gold in more than a year.
USD: easy there
Jerome Powell just gave an exclusive speech on NBC’s “Today” show. Just so that you understand how exclusive it is: the former Fed Chairman Alan Greenspan appeared before the cameras in 1987 foreshadowing a record drop in the stock market. A similar performance was done by Ben Bernanke in 2009 resuming the financial crisis of that time.
So the appearance of the Fed Chair on the TV is the same like the appearance of a comet in the sky – and similarly is often interpreted as a harbinger of hard realities to come.
What did he say?
The main message was that the situation is not easy, quite special, quite unseen before, but the Fed is prepared and has all it takes to fight back the virus consequences. The main objective of the speech, apparently, was to cool down the market assuring that “we still got ammo”. So it did – the USD eased on the JPY, as the first result of the speech.
USD easy, then?
Yes, quite so. The battle was fierce between the two currencies to secure the 111.70 range of heights, but the speech of Jerome Powell made the USD cede its positions. 108.30 is eyed as support now. Market steamed off.
The Fed made a hawkish surprise! The bank would start a discussion about scaling back bond purchases. Besides, it is likely to make two interest-rate increases by the end of 2023 (sooner than expected)!
The Federal Reserve will release its statement and announce its interest rate decision at 21:00 MT time. Then, at 21:30 MT time, the central bank will hold a press conference.
Wednesday will please traders as many economic indicators will be out! The USA, UK, and Euro Area will release PMI reports on June 23 from 10:15 to 16:45 MT.
The Bank of England will release its statement and announce its monetary policy decision at 14:00 MT.
Last week the USD soared versus other major currencies, while gold headed for the biggest weekly loss in 15 months. Let’s see what new moves await us this week!