Dollar dips after Powell testimony

HEADLINES

 

 

 

• Dollar eases after Powell testimony; riskier currencies rise
• Sterling steadies near 23-month high versus euro
• Oil nears $84 as Omicron impact expected to be short-lived
• Gold jumps 1% as dollar dips after Powell testimony
• U.S. stocks bounce, investors digest news of 2022 rate hikes
• XAU/USD still has game even as Fed talks hawkishly – TDS

 

 

 

FOREX

 

 

 

Dollar eases after Powell testimony; riskier currencies rise

 

The dollar edged lower against a basket of currencies on Tuesday after Federal Reserve Chair Jerome Powell's testimony signalled that while the Fed will be normalizing policy it has not made a decision on reducing its nearly $9 trillion balance sheet.

Powell noted that policymakers were still debating approaches to reducing the fed's balance sheet, and said it could sometimes take two, three or four meetings for them to make such decisions.

 

Sterling steadies near 23-month high versus euro

 

Sterling rose on Tuesday to touch a pre-pandemic high versus the euro, supported by expectations that the Bank of England will raise interest rates further. Over the past weeks, investors have ramped up expectations that the BoE will raise interest rates as early as next month after a surprise hike in December by 15 basis points, to 0.25%.

 

 

 

COMMODITIES

 

 

 

Oil nears $84 as Omicron impact expected to be short-lived

 

Oil rose to nearly $84 a barrel on Tuesday, supported by tight supply and expectations that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery.

A lack of capacity in some countries has meant that supply additions by the Organization of the Petroleum Exporting Countries (OPEC) are running below the increase permitted under a pact with its allies.

 

Gold jumps 1% as dollar dips after Powell testimony

 

Gold prices climbed 1% on Tuesday as the dollar slipped after U.S. Federal Reserve Chair Jerome Powell's testimony before Congress did not spring any surprises in terms of monetary tightening, while a retreat in bond yields also lent support.

 

 

 

STOCKS

 

 

 

U.S. stocks bounce, investors digest news of 2022 rate hikes

 

U.S. stocks bounced and Treasury yields retreated on Tuesday in choppy trade as investors absorbed remarks from the Federal Reserve that interest rates are likely to rise this year, as expected.

U.S. December consumer inflation data will be released on Wednesday with headline CPI expected to hit a red-hot 7% year- on-year, boosting the case for rates to rise sooner rather than later.

 

 

 

ANALYSIS

 

 

 

XAU/USD still has game even as Fed talks hawkishly – TDS

 

while the US central bank may be on track to raise rates, it will still provide an expansionary monetary policy. And, central banks will continue to buy gold, while investors are looking to diversify given a higher perceived risk of equity market volatility, suggesting that gold speculators' relative short positioning may still drive the yellow metal into the $1,850s/oz in the early months of 2022.”

“But, while negative real rates along the curve should protect gold from a full-blown rout, the yellow metal is projected to trade in the mid $1,600s for much of H2-2022.”

 

 

 

CHART

 

 

 

New Zealand dollar / US dollar – Weekly Candlesticks

Source: GKFX Prime Metatrader 4

NZD/USD is sitting at a long term S/R pivot, which could determine the long term trend. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

 

https://www.fxstreet.com/economic-calendar
https://www.reuters.com/markets/europe/sterling-rises-almost-10-week-high-versus-dollar-2022-01-11/
https://www.reuters.com/markets/europe/dollar-slips-ahead-powell-comments-swiss-franc-seven-week-high-2022-01-11/
https://www.reuters.com/markets/europe/gold-gains-us-dollar-yields-pull-back-before-powell-testimony-2022-01-11/
https://www.reuters.com/markets/europe/global-markets-wrapup-3-pix-2022-01-11/
https://www.reuters.com/markets/commodities/oil-resumes-climb-renewed-risk-appetite-tight-opec-supply-2022-01-11/