News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Gold prices gain as potential systemic risks out of China's Evergrande Group roil broader markets. Meanwhile, iron ore is ticking higher after a big drop on Monday as China steps up steelmaking curbs. Get your market update from @FxWestwater here:https://t.co/l4kAWDJ2wm https://t.co/b9m5ADIqqb
  • Gold remains higher despite positive Evergrande news out of China. Meanwhile, copper bulls are pushing prices upward as the potential for a housing crisis in China ebbs. Get your market update from @FxWestwater here:https://t.co/TK3MNntBdA https://t.co/14UKjR4w6M
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
  • S&P 500 contending with its proverbial ‘line in the sand’ as bulls and bears battle for directional control. How we close/trade around the 50-day moving average could serve as a noteworthy bellwether for risk trends headed into next week. I remain cautious below ~4,480. $SPX $ES https://t.co/qogkjs1Sx2
  • USD/JPY trades to a fresh monthly (110.57) amid the pickup in longer-dated US Treasury yields, and the exchange rate may stage a larger advance over the coming days. Get your market update from @DavidJSong here:https://t.co/dlNXOrJnM9 https://t.co/LCQd26W1zF
Dollar Sinks, Stocks Soar on Dovish Remarks from Fed's Powell

Dollar Sinks, Stocks Soar on Dovish Remarks from Fed's Powell

Peter Hanks, Strategist

Talking Points:

  • The statements amount to a significant fundamental shift in tone for US monetary policy
  • Before the speech, implied probability of a 25 basis-point hike at December’s meeting was 79.6%
  • The Fed is scheduled to meet on December 19th, an event with heightened anticipation given the following press conference and recent developments

The Dollar dove across the board on Wednesday after Federal Reserve Chairman Jerome Powell delivered a speech to the Economic Club in New York. Powell’s speech covered topics from financial stability and equity valuations but his commentary on the interest rate range delivered the most shock to markets.

Learn to trade around news events and data releases with our Introduction to Forex News Trading guide.

In his speech, the Chairman asserted there was “a great deal to like” about the US economy as he expects solid US growth, low unemployment and near-target inflation. He also reiterated the findings of the Fed’s Financial Stability report released earlier Wednesday.

As for monetary policy, Mr. Powell said the Fed is “balancing the risks of shortening expansion on one hand, higher inflation and instability on the other.” In a shift to the dovish side, Powell said, “there is no preset policy path” and rates now are “just below” the neutral range. The remarks amount to a relatively significant fundamental development for the Dollar and it reacted appropriately.

US Dollar Basket Price Chart (DXY) Hourly, November 15th – November 28th

USD price chart change on dovish Fed

Markets have long thought the Fed was headed for three hikes in 2019 following a hike at December’s meeting. Thus, the remarks derailed expectations and weakened a major tailwind for the Dollar. While surprising, the dovish tone is not completely out of left field. In recent weeks, Federal Reserve officials Powell, Clarida and Bostic have suggested the interest rate range is near neutral and further hikes may be imprudent at this time.

View our Economic Calendar for upcoming Federal Reserve meetings and economic data from all the majors.

In contrast to the Dollar, US equities surged on expectations of continued low borrowing costs and the three major indices turned green for the month of November. The S&P 500 added to gains and surged 1.64% to highs around 2726 following the comments.

S&P 500 Price Chart 2-Hour, November 2018

S&P 500 price chart on Fed change

Markets will now look to the next Fed meeting for further clarification on the central bank’s path. The Fed is scheduled to decide on the interest rate range on December 19th with a press conference to follow. Before Powell’s speech Wednesday, implied probability of a 25-basis point hike at the December meeting rested at 79.6% but expect a significantly reduced probability in the days to come.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: Fed’s Financial Stability Report Warns of ’Elevated’ Corporate Debt

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES