Jerome Powell Shakes the Markets
20 October 2023
Thursday delivered a consequential day for the global financial landscape, with ripples from Jerome Powell's address at the Federal Reserve still resonating deeply within trading circles. His forthright commentary on inflation and its broader economic implications carried a distinctly hawkish tint. Such sentiments quickly permeated the market, sending significant indices like the DAX, NASDAQ, and S&P 500 into a downward spiral. While DAX grappled with its own demons, sinking to midterm lows, NASDAQ revisited levels unseen since the 6th of October. Not to be outdone, the S&P 500 teetered perilously close to a long-standing uptrend line, with a potential breach signaling ominous undertones for equity traders.
Transitioning from equities to the currency spectrum, Thursday saw the Swiss Franc's might in full display. This traditionally stable currency showcased unparalleled strength amid market turbulence, asserting its dominance particularly against the US dollar. The day was not as kind to the antipodean currencies: both the Australian and New Zealand dollars weathered challenges, with the former approaching pivotal support levels and the latter descending to lows not seen since early November 2022. These trajectories are pivotal for forex aficionados as they set the tone for potential opportunities or threats.
As Friday dawned, market participants awaited crucial data points from the UK and Canada, notably retail sales figures. UK's retail sales data, anticipated to reflect a 0.3% drop, could be indicative of consumer sentiments and broader economic health in the region. Simultaneously, Canadian retail numbers, yet to be unveiled, will shape the CAD's performance on forex charts.
Speaking of charts, Thursday’s narratives seeped into Friday's canvas. Commodity enthusiasts are watching gold's unwavering ascent, as it steadily approaches the $2070 marker. Silver remains firm in the bullish territory, but the story of the day is oil. Both WTI and Brent are at an intriguing juncture, testing a recent uptrend line, albeit from below. A successful breach upwards would solidify the bullish sentiment that has been germinating, offering potential avenues for commodity traders.