Wall Street soars after Powell’s speech
In a speech yesterday, Fed Chairman Jerome Powell hinted that rates could be “just below” what is perceived as a neutral level. The market interpreted this as meaning fewer rate hikes next year, and equities surged while the US dollar fell as a result.
US30USD Daily Chart
The US30 index rallied to its highest level in nine days after Powell’s speech, adding the most in one day since October 16
The index is rising toward the convergence of the 55- and 100-day moving averages in the 25,594-25,605 area
US personal income is expected to rise 0.4% m/m in October after a 0.2% gain in September. Spending is seen unchanged at +0.4% m/m. Spending needs to pick up to give any boost to the economy.
DE30EUR Daily Chart
The Germany30 index edged higher in yesterday’s trading as investors bid up equities amid hopes for a dovish Powell speech. Sure enough, they got one, so the index should rise again today
The 55-day moving average is at 11,697 and has capped prices on a closing basis since August 29
Consumer prices in Germany are expected to rise at a slower pace of 2.4% y/y in November, data today should show. Slower price increases could help the ECB maintain rates lower for longer and help stocks.
XAU/USD Daily Chart
Gold advanced for the first time in four days yesterday as the US dollar fell after Powell’s speech
The commodity bounced off the 100-day moving average at 1,212 for a second straight day. Recall the 55-day moving average crossed above the 100-day moving average on Monday, a medium-term bullish indicator. Trendline resistance may be found near 1,227
The release of minutes of the last FOMC meeting early tomorrow Singapore time could disclose whether tapering of rate hikes was discussed. We may get a glimpse of what the Fed thinks the rate horizon will look like in 2019.
