We saw stocks and the dollar rally strongly after Fed Chief Jerome Powell’s first Semi-annual Monetary Policy Report to the Senate Banking committee last night. He maintained the Fed’s recent stance that gradual hike rates are appropriate ‘for now’ to keep inflation near it’s target level, but also advised that continued US protectionist policies could hurt domestic economic growth as well as hit wage numbers. The dollar appreciated against all the majors after the release and Gold once again took another step lower to hit new lows for the year.
President Trump backtracked on previous comments after his meeting with Vladimir Putin saying that he made a mistake and accepts US intelligence findings on Russian meddling in the election, but also threw in a caveat that it ‘could be other people also’. Once again there has been no real market reaction to the Presidents political issues, but investors will be monitoring the situation closely as any further fall out could push through to more market related matters.
Asian stock markets are set to open on the front foot today and investors will be looking for levels to buy dollars against the majors in the short term. Asian EM currencies are still trading at vulnerable levels and last night’s comments in Washington will not have helped those central banks trying to slow the depreciation of their currencies against the greenback.
In terms of fundamental data releases it’s a quiet day for Asian ahead but once again the market focus will turn to the UK on the London open as we have the latest CPI data due out in the UK and then the same data for Europe half an hour later. We have Building Permits due in the US before we once again hear from Jerome Powell. Also due are the latest US Crude Oil inventory numbers and the market will be watching these closely after a report last night from an industry group advised that there will be a surprise increase, market expectations previously sat at a decrease of 3.4m barrels.