Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
AZIONI
For anyone wondering why assets rose across the board on Thursday, look no further than Governor Christopher Waller. In an interview with Reuters yesterday morning, the Federal Reserve board member expressed confidence in current US inflation trends and even mentioned voting in favour of a rate hold during the next FOMC meeting. Waller claimed that the Fed is ‘finally seeing some signs of disinflation’, meaning that the rate of inflation, while still positive, appears to be slowing down. In one of the most forward-looking statements to date, the governor admitted that the Fed could afford to ‘give disinflation a chance’, adding ‘we can wait one meeting’. Waller even went as far as to say that underlying trends were actually ‘better than the core numbers suggest’, noting that the three-month annualised core inflation rate had dropped from 4.76% in February to 3.05% in July.
The comments are somewhat in opposition to Kevin Warsh’s statements from last Friday’s speech at Jackson Hole, in which the Fed Chairman said that underlying trends had not meaningfully improved. The implied odds of a rate hike on the 16th of September immediately shifted following the interview, falling to around 50% compared to 64% before the segment was published.
Currencies also reacted quickly to the change in expectations, causing the dollar currency index to lose over half a percent, dragging the DXY down to 99 points. Interestingly, the biggest major currency pair movement was in the yen, which gained almost 2% against the greenback on Thursday, lowering USDJPY down to the 155 range, the lowest rate in a month. Bank of Japan board member Hajime Takata came out with an equally unexpected statement on Wednesday, during which he claimed that the central bank needed to move nimbly to raise interest rates in order to combat persistent inflation risks within the island economy. While the Fed’s next decision is scheduled for the 16th of September, the BoJ will follow with its own decision just two days later on the 18th. The back-to-back rate calls, crammed into a narrow 48-hour window, are creating the perfect storm for the highly significant currency pair. Adding even more fuel to the fire, the Bank of England decision lies snugly between both.
The prospect of not-so-high interest rates on the dollar sent precious metals upwards yesterday, with gold punching up to $4,473 per ounce and silver reaching up to $67. Cryptocurrencies were also keen on the change in sentiment, as Bitcoin pumped straight back up to $81,000 per coin, from just $77,000 earlier in the session. US stocks were similarly impressed, lifting both the Dow Jones and the Nasdaq-100 1.2% higher by the end of the day, while the S&P 500 lagged a little behind with a 1.1% gain.
With no real developments coming out of the Iranian conflict, market participants will have their eyes firmly trained on the upcoming NFP release. A modest 56k jobs are expected, with unemployment remaining at 4.1%, fitting in with the accepted ‘low fire, low hire’ narrative currently pervading the US labour market.
Il trading di derivati e prodotti con leva finanziaria comporta un rischio elevato e può causare perdite superiori al capitale inizialmente investito. Prima di fare trading, leggere i nostri Termini e Condizioni (T&C) e il Product Disclosure Statement (PDS).
APRIRE UN CONTO