Powell shakes the markets again
08 March 2023
Yesterday, the market sentiment shifted heavily due to the remarks made by FED Chairman Jerome Powell in his testimony before Congress on Tuesday. Powell's comments were taken as hawkish, leading experts to believe that the FED may re-accelerate the scale of rate rises. Powell admitted that the FED can lift rates higher and faster than initially expected.
This shift in sentiment impacted the USD and indices. The USD gained significantly, with the USDJPY reaching its highest level since mid-December, while the EURUSD dropped to its lowest level since January 6, threatening key support at 1.049. The Cable also broke key support at 1.192, triggering a sell signal. Indices dropped, in some cases cancelling out the great bullish candle from Friday, such as the Dow Jones, which is in freefall and on its way to test the 32500 support again. The SP500 made a reversal and is now back below the mid-term uptrend line, which is a bearish sign. As long as the price stays below yesterday's highs, the sentiment is negative.
A stronger dollar also affected commodities. Gold collapsed, cancelling out the upswing from the past six trading days. The technical situation suggests that more pain is about to come. Oil, which had been performing well since February 23, also dropped, but buyers are still in a relatively comfortable position due to the recent upswing.
Today's volatility is expected to continue, as the calendar is rich in macro events. FED Chairman Powell will speak before Congress for the second day. Canada's rate decision is expected, with no change anticipated. In addition, the calendar includes the ADP and JOLTS Job Opening numbers, as well as GDP from the Eurozone and a speech by Christine Lagarde, the ECB President, which will be of interest to European traders.