Fed Chairman is expected to speak today - 14.7.2021

IFC Markets

Master Trader
Oct 31, 2012
London (Great Britain)

Top daily news​

Fed Chairman Jerome Powell can comment on the strong inflation in the US in June to 5.4% in annual terms. It peaked since August 2008, when there was another global economic crisis. Recall that at that time the Fed's rate was 2%, and now it is 0.25%. Investors are hoping for a tightening of the Fed's monetary policy. This will support the dollar rate, but may have a negative impact on the quotes of stock indices, precious metals and commodities.

Forex news​

Currency PairChange
AUD USD+0.24%
EUR USD+0.19%
GBP USD+0.32%
USD CAD-0.14%

On Tuesday, the US dollar index rose for the second day in a row. Investors hope that the Fed will speed up the timing of the rate hike amid strong consumer price increases. American inflation in June this year reached 5.4% in annual terms, which is the highest since August 2008. At the same time, the growth of core inflation (core CPI) amounted to 4.5% in annual terms. It turned out to be the largest since November 1991. US consumer prices rose on the back of a historically low Fed rate of 0.25% and huge government monetary stimulus programs. Since the beginning of the coronavirus epidemic in 2020, their total volume has been $ 6 trillion. However, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen previously stated that high inflation in the United States is a temporary phenomenon. 160 million Americans were vaccinated fairly quickly, who left quarantine and began to spend their funds. This could increase consumer prices due to increased demand. Recall that already in May, the core personal consumption expenditures price index soared by 3.4% yoy, which is the highest since April 1992. Note that while the representatives of the FRS are concerned only with the powerful rise in prices for American real estate. The Reserve Bank of New Zealand (RBNZ) meeting took place today. RBNZ kept the rate at 0.25%, but at the same time announced the reduction of the asset repurchase program through money issue by NZ $ 100 billion ($ 70 billion). This contributed to the strengthening of the New Zealand dollar. Some investors are hoping for an increase in the RBNZ rate at the next meeting on 18 August.

Stock Market news​

Dow Jones Index-0.31%
S&P 500-0.35%
Nasdaq 100-0.38%
US Dollar Index-0.13%

On Tuesday, US stocks dropped. Market participants believe that a possible tightening of the Fed's monetary policy may increase the lending burden on corporations. In the US, the season for the publication of reports for the 2nd quarter has now begun. An additional negative for the market was the decline in quotations of banks JPMorgan (-1.5%) and Goldman Sachs (-1.2%) despite the positive financial indicators. Investors fear that the banking sector may suffer, as if the Fed's rate increases, an increase in bond yields will cause a decrease in their price. Aviation maker Boeing was down 4.2% on reports of minor technical problems with its 737 Dreamliner. Refinitiv predicts that S&P 500 companies' total profits will increase 66% in Q2 2021 compared to Q2 2020. Recall that over 12 months, this stock index rose by 38.5%. Today the US is expected to publish the Fed Beige Book economic survey and the speech of the Fed Chairman Jerome Powell. He can comment on the June surge in inflation. US stock index futures are currently trading lower. Quarterly reports of Bank of America, Wells Fargo, Citigroup, Delta Air Lines, BlackRock and other companies will be released in the US today.

Commodity Market news​

WTI Crude+0.11%
Brent Crude Oil+0.09%

World oil prices rose yesterday. The International Energy Agency does not rule out a shortage of hydrocarbons against the backdrop of a delay in the conclusion of a "nuclear deal" between Iran and Western countries. Oto slows down the start of Iranian oil exports. The independent American Petroleum Institute announced a decline in US oil reserves for the week by 4.1 million barrels. Their decline has been observed for the 8th week in a row and is the longest since January 2018. This morning, the rise in oil prices has stalled due to reports of a 3% reduction in oil imports to China in the 1st half of 2021. This is the first half-year decline in oil supplies since 2013. OPEC + is now discussing oil production quotas in August. Information about these negotiations may affect quotes.

Gold Market News​

Silver/US Dollar+0.12%

Gold quotes rose today despite the strengthening of the US dollar. Investors hope that Fed Chairman Jerome Powell, in his speech to Congress today, will confirm that the rate hike will not happen soon. By itself, high US inflation is supporting demand for precious metals.