Fed's Powell said decisions are made meeting by meeting. He sees solid increases in consumer spending, moderate growth in capital spending, and a pickup in residential investment. He characterizes the labor market as strong but not overheated. He says that more good data would strengthen their confidence. He also said that elevated inflation is not the only risk we face – setting the case for slower growth leading to a recession (I guess). Nevertheless, he cites the risk of acting too early.
There is a lot of two-way bias but the door is open for September. The market is pricing in a 75% chance of a cut in September, and a 75% chance of a second cut in December.
Looking at yields, they are marginally higher but not a lot.
Dow Industrial Average average is still down by -0.36%. The S&P is up 0.17% and the NASDAQ is coming off its highs but is still up 66 points or 0.36% (it was up close to 100 points). The Russell 2000 is down -0.23% as it reacts to higher yields and the potential for slower growth.
In the forex:
- USDJPY: Trades above and below its 100 and 200 hour moving average is currently at 161.03 and 161.10 respectively. The price currently trades at 161.134 after trading as high as 161.30, and as low as 160.88.
- EURUSD: The EURUSD is also trading up and down. The 100-hour MA comes in at 1.08145. The price is trading at 1.08165. The high reach 1.08273 after the initial comments. The low price reached 1.08087. With the recent move higher, it is up to the sellers to push and stay below the 100 hour MA. Absent that, and they are not winning. The buyers are still in control.
- GBPUSD: The GBPUSD continues to stay below the swing area above at 1.28168 – 1.28272. If the price is going higher, it needs to get and stay above this level. Having said that, the sellers are not exactly taking back more control after the sharp rise last week in the extension this week. Getting below 1.2754 – 1.2777 would give sellers more confidence.
