FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
Markets.com information and reviews
FxPro information and reviews

Over to you, Mr. Powell

28 August 2020

The stage is set (or bedroom and bookshelf) for the Fed Chair’s keynote speech at the annual Jackson Hole pow-wow for central bankers, which is scheduled for 14.10 London time.  This (virtual) conference is notoriously one of the potential policy-defining events of the year and 2020 may well be no different, even if the market is somewhat exhausted by the alphabet soup of measures announced during the Covid-19 crisis.

In fact that soup remains on the menu with AIT (Average Inflation Targeting), YCC (Yield Curve Control) and MMT (Modern Monetary Theory) all mooted as policy levers ready to be used by the Fed and to be announced in the review of its monetary policy framework in the upcoming FOMC September meeting. YCC a-la- Japan certainly seems to be off the table having not been mentioned in the latest meeting minutes, so traders are expecting a policy move to allow inflation to overshoot the 2% target and make up for the undershoots, in order to achieve two percent on average.

What does this mean for markets? As we have seen for some time, AIT would cement the prospects of low US real rates for the foreseeable future and keep the Dollar on the back foot. Going forward, the Fed would hope to see higher inflation and long-term yields which would at some point result in a slightly stronger dollar. Whether this will actually work is a question for another time, but the Fed’s credibility may rest on its ability to convince the market that it can achieve these goals.

DXY already priced?

With dovish-leaning comments expected from Powell and the Dollar taking another hit yesterday with cyclical G10 currencies rallying, anything else today will see a strong reversal in this trend and an equity market sell-off. The EUR did lag the other majors in Wednesday’s move, but we remind ourselves that long EUR speculative positioning is very stretched.

DXY prices are still oscillating around, but just under the long-term trendline from May 2011 so this appears to represent quite a barrier to any upside. Otherwise, the bearish trendline from the May highs this year may cap any dollar strength with strong resistance around 94.00. The August lows at 92.13 are the first target for sellers if we see the index continue its bearish momentum.



Brent Crude has cleared its way for $100
Brent Crude has cleared its way for $100

The Gas Armageddon doesn’t look likely to leave Europe anytime soon, with its effects trickling more and more clearly into related markets. Brent crude updated...

28 Sep 2021

Strong Durable goods orders are bullish for USD
Strong Durable goods orders are bullish for USD

US Durable goods orders notably exceeded expectations (+0.7% m/m), adding 1.8% in August after rising 0.5% a month earlier. The rise here is a signal of confidence of US...

28 Sep 2021

Yen and tech stocks bleed as yields march higher
Yen and tech stocks bleed as yields march higher

The specter of rising interest rates has returned to haunt financial markets. The Fed breathed some life back into Treasury yields last week after it opened...

28 Sep 2021

S&P 500 H4: Bulls are in the reign
S&P 500 H4: Bulls are in the reign

The S&P 500 on the H4 time frame was in a down trend until a lower bottom was reached on 20 September at 4306.5. After the lower bottom, bulls gathered...

27 Sep 2021

Stocks up as markets look to Berlin & Washington
Stocks up as markets look to Berlin & Washington

Stocks are higher in early trade in Europe, with the DAX jumping 1% at the open as it looks as though Germany is heading for a traffic light coalition - more left, more green...

27 Sep 2021

No clear winner in German elections
No clear winner in German elections

Euro pulls back after inconclusive German election. Dollar balances faster Fed hikes against fading Evergrande fears. Wall Street and oil prices keep climbing ahead of busy week...

27 Sep 2021

Forex Forecasts

OctaFX information and reviews
HotForex information and reviews
XM information and reviews
FXCM information and reviews
Vantage FX information and reviews
Vantage FX
Moneta Markets information and reviews
Moneta Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.