Fed Chair Jerome Powell threw cold water on the prospect of near-term rate cuts, pointing to stubbornly persistent inflation, which will push up the US dollar and US Treasury bond yields.
➡️ US Federal Reserve Chairman Jerome Powell spoke last night and made it clear that inflation is proving unexpectedly high and stubbornly refuses to continue its previous decline. He concluded that it is not yet safe to cut rates and stressed that the Fed will not encounter any rate cuts anytime soon. This strengthened the US dollar, bringing the 2-year Treasury yield to 5% for the first time in 5 months.
➡️ In the Forex market, the US dollar maintains recent gains. Since Tokyo opened today, the strongest major currency has been the New Zealand dollar, while the weakest major currency has been the US dollar. However, it is not at all clear that this is due to a change in sentiment, which could be a natural retracement. Yesterday the USD/JPY currency pair it continued to rise to a new 34-year high not far from the big round number of ¥155. Trend following traders will be interested in the long side, even though the breakout point is now slightly below ¥152.
➡️ They continues to look solid, while silver appears relatively bearish. Trend traders will still be interested in gold on the Long side, but less so in silver.
➡️ Speculation continues about an Israeli retaliatory strike against Iran. Israel has pledged to respond, but is obviously leaving the world in doubt. However there appear to be indications that any retaliation will be calibrated to be quite weak, which could help the price of crude oil to rise further, which is probably President Biden's main concern as he tried to persuade Israel not to react at all.
➡️ A few hours ago the UK CPI data was published, slightly higher than expected, at an annualized rate of 3.2%. This value is down from the previous 3.4%, but higher than the expected 3.1%. The pound enjoyed a slight gain after this data was released.
➡️ Today we also saw the release of New Zealand's Consumer Price Index data, which as expected recorded a quarterly increase of 0.6%. This was slightly higher than the previous quarter's increase of 0.5%.
➡️ Markets await the release of data on the Australian unemployment rate, while the governor of the Bank of England will speak this evening.
➡️ Anticipation is growing for the expected arrival of the halving of Bitcoin at the end of this week, probably Friday. Bitcoin is far from its relatively recent high and looks like it could fall further.
➡️ The lesser commodity Cocoa yesterday fell sharply, suggesting that the long-term uptrend may be over. The value of the superfood has nearly tripled in the last year alone, and many analysts suggest that supply-side shortages are at least partly responsible for the meteoric rise. Every year there is more and more demand for cocoa as it is coveted as a key ingredient for chocolate but also as a superfood in its own right.
Credit by DailyForex.com
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