26 Feb: All eyes on new Fed Chair, Jerome Powell, testifying to Congress this week.

By | February 26, 2018

 

The currency markets were mostly rangebound on Friday, with little new to move the market ahead of the new Fed Chair, Jerome Powell’s semi-annual testimony to Congress this week. The market is not expecting him to say anything new, with inflation expected to hang around 2% for the rest of the year, although several rate hikes are on the agenda. It appears that the Fed will hike three times this year and Fed fund futures are pricing in 83.1% for a 25bp hike in March. There is some speculation that there could be a fourth hike in 2018 and this was partly to blame for the recent loss of momentum in the 10 year yield last week, which saw a fall to 2.867% on Friday, and which also helped the rebound in stocks, which closed up by around 1.3%. The metals traded in a narrow range at the end of the week, while WTI settled higher, with a drop in Libyan production and upbeat comments from Saudi’s oil chief offsetting  data showing that the number of US oil rigs increased for the fifth-straight week.

It is going to be an action-packed week’s ahead with a lot of data to get through although much of it will be of a secondary nature and the market is going to be fixated on what Jerome Powell has to say to Congress on Tues/Wed. Don’t expect any fireworks, with much of what he is going to say already scripted after the Fed released it Monetary Policy Report last week. It is still going to be pretty active on most days though, with Powell and the other highlights likely to be;

  • Fed’s Bullard Speech – Mon
  • German CPI, US Durable Goods Orders, Fed’s Powell – Testimony to Congress – Tues
  • China NBS Mfg/Non-Mfg PMIs, US Preliminary Q4 GDP, Fed’s Powell – Testimony to Congress – Wed
  • Australian CAPEX, EU/UK/US Mfg PMIs, US ISM Mfg/Prices Paid, US Personal Consumption/Expenditure – Thur
  • German Retail Sales, EU PPI, US Rts/Michigan Consumer Sentiment Index – Fri.
CURRENCIES
EURUSD: 1.2294
Res  1.2320  1.2350  1.2395
Sup  1.2260  1.2235  1.2205
USDJPY: 106.86
Res  107.15  107.40  107.60
Sup  106.50  106.25  106.00
GBPUSD: 1.3969
Res  1.4010  1.4040  1.4070
Sup  1.3960  1.3935  1.3905
USDCHF: 0.9360
Res  0.9375  0.9410  0.9470
Sup  0.9320  0.9300  0.9275
AUDUSD: 0.7839
Res  0.7930  0.7945  0.7970
Sup  0.7825  0.7805  0.7790
NZDUSD: 0.7292
Res  0.7325  0.7345  0.7365
Sup  0.7270  0.7240  0.7200
INDICES / COMMODITIES
S&P: 2745
Res  2755  2770  2780
Sup  2735  2720  2710
DJI: 25298
Res  25335  25425  25470
Sup  25220  25130  25045
ASX SPI: 5999
Res  6015  6030  6050
Sup  5985  5970  5950
XAUUSD: 1329
Res  1335  1340  1345
Sup  1320  1315  1310
XAGUSD: 16.52
Res  16.65  16.75  16.85
Sup  16.45  16.35  16.25
WTI: 63.55
Res  63.75  64.25  65.00
Sup  63.00  62.40  61.95