The expected 0.25% interest rate rise and optimistic talk by Jerome Powell weakened the USD. Why?
Because the market saw this as a strong signal that the Fed will pivot soon and start to lower interest rates.
However, Friday’s Non-Farm Payrolls were excellent and WAY beyond analysts’ expectations, thereby strengthening the USD.
The Unemployment Rate is at its lowest since 1969 at 3.4% and this all sounds great, but it means that the Fed will NOT be lowering Interest Rates any time soon, contrary to Powell’s earlier speech.
This also affected Gold dramatically, with price action falling to a key level at $1,860.
We see the same effect with the Fed speech strengthening Gold, then the NFP report knocking it back.
Also, we see a gap in price action on USDJPY but be careful as the gap has jumped a key demand zone.
Let’s look at this from the technical side tomorrow.
We will be watching Australian Dollar pairs tomorrow as the RBA will be announcing its Interest Rate decision.
Remember, the RBA is still trying to fight inflation so we will likely see a rise in rates of at least 0.25%.
The markets will be watching speeches this week from Jerome Powell, the Bank of Canada, the Bank of England, and an EU Leaders Summit for news on everything, especially inflation, Interest Rates, QE and QT.
The stock markets, like the NASDAQ, did well last week, then retreated just like the USD but, with the US shooting down a Chinese spy balloon, this has put international relations in the news again.
The idea of higher Interest Rates caused WTI and Brent Crude to plummet to support in WTI’s $73 range.