Dollar dives on Powell's remarks

28 February, 2019

King Dollar was a step closer to losing its crown yesterday after Federal Reserve Chairman Powell reiterated the Fed’s ‘patient’ policy mantra during his Congressional testimony.

Although Powell delivered an encouraging assessment of the economy, he did acknowledge the multiple headwinds both domestically and externally. A string of disappointing economic reports from the United States have triggered concerns over growth prospects, while geopolitical risks and fears of plateauing global growth are compounding the uncertainty. With a ‘patient’ and ‘flexible’ Fed likely to leave interest rate unchanged for an extended period of time, the Dollar remains vulnerable to downside shocks.

The Greenback’s negative reaction to Powell’s testimony was quite interesting, given that his comments were old news with no fresh insight provided. I see this reaction as an early signal for increased Dollar sensitivity to remarks from Fed policy makers and economic data. All in all, it does feel like Dollar bulls are running on borrowed time and this continues to be reflected in the Dollar’s price action.

Taking a look at the technical picture, the Dollar Index is under increasing pressure on the daily charts. A solid breakdown and daily close below the 96.00 support level is seen opening a path towards 95.70 and 95.50, respectively.

Stock markets search for fresh catalyst


Asian markets edged higher this morning as investors kept a close eye on the US-North Korean summit, scheduled to commence in Hanoi later today.

Global risk appetite is likely to receive a solid boost if talks between US President Donald Trump and North Korean leader Kim Jong Un end on a positive note. It must be kept in mind that stock markets still remain influenced by US-China trade developments, global growth concerns and other geopolitical risk factors. Any fresh news on the trade front or rising geopolitical risks will play a role in where global stocks close this week.

Currency spotlight – GBPUSD


The British Pound was an unexpected champion across currency markets yesterday as expectations mounted over a delay in Brexit.

A promise from UK Prime Minister Theresa May for a vote to delay Brexit if her deal is rejected came as a breath of fresh air for investors. While the Pound is likely to extend gains amid the current optimism, the question if for how long? It is quite frightening how sensitive and explosively volatile the Sterling has become to Brexit headlines, and this is likely to intensify as the March 29 deadline looms.

Focusing on the technical perspective, the GBPUSD is heavily bullish on the daily charts. The daily close above 1.3200 has opened the gates towards 1.3310 in the short to medium term.


Source link  
Global stocks turbocharged by hopes

Global equity bulls are continuing their unstoppable momentum into the conclusion of the trading week, as well-orchestrated, cautious remarks...

Gold pounce on Fed's easing bias

Asian currencies are now climbing higher after the Dollar index (DXY) fell below the psychological 97 mark during the Asian session, as the...

Emerging markets to jump

A collective sigh of relief has roared across financial markets after the Federal Reserve confirmed market expectations of the...


Markets turn defensive

The mood across financial markets is set to remain cautious as investors find comfort on the sidelines ahead of several major central bank decisions over the coming days...

Oil rebounds on geopolitical tensions

It has been a rollercoaster trading week for oil markets as investors tussled with conflicting fundamental themes pulling and tugging at the...

Markets hit by caution ahead of US retail sales data

The mood across financial markets was cautious this morning as rising geopolitical tensions in the Middle East and persistent...


Gold sinks to fresh weekly lows

Gold stumbled to a fresh one-week low on Tuesday as cautious optimism over global trade developments boosted risk sentiment and dampened...

Global trade developments drag on

Asian equities were mostly lower on Wednesday morning as risk sentiment swung back to caution on persistent US-China trade tensions...

Stocks fight for gains

Asian stocks advanced on Tuesday, while US and European equities are poised for more gains, even as heightened trade tensions and persistent concerns over global growth test risk sentiment.

  


Share it on:   or