The US Dollar Is Strengthening After the Speech of the Fed’s Chairman

Yesterday, the new Fed chairman, Jerome Powell, made a speech in the Congress. According to him, the US economy is growing at a steady pace, inflation is increasing, and there is no risk of recession, the market remains “bullish”. It is expected that this year interest rates will triple, the first increase will be in March. Powell also noted that, when forming a monetary policy, the Fed would maintain a balance between preventing the market overheating and achieving inflation rate of 2%.

After optimistic statements of the official, the American currency strengthened against the major currencies. Yesterday, the US dollar index (#DX) closed in the positive zone (+0.55%). Despite the growth of the dollar index, the dollar fall against the yen, after the Bank of Japan announced that it intended to reduce Japanese government bonds purchases. This statement supported the yen.

The “black gold” prices are getting lower. Futures for the WTI crude oil are testing a mark of $62.75 per barrel. Investors are still concerned about the increase in oil production in the US. Weak statistics on business activity in the manufacturing sector of China put additional pressure.

Market Indicators

Yesterday, there were aggressive sales in the US stock market: #SPY (1.25%), #DIA (1.15%), #QQQ (1.24%).

At the moment, the 10year US government bonds yield is at the level of 2.902.91%.

Report on the German labor market at 10:55 (GMT+2:00);Consumer price index in the Eurozone at 12:00 (GMT+2:00);GDP data in the US at 15:30 (GMT+2:00);Pending home sales index in the US at 17:00 (GMT+2:00).

by JustMarkets, 2018.02.28