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Daily Markets Broadcast 2018-11-29

Daily Markets Broadcast

2018-11-29

Wall Street soars after Powell’s speech

In a speech yesterday, Fed Chairman Jerome Powell hinted that rates could be “just below” what is perceived as a neutral level. The market interpreted this as meaning fewer rate hikes next year, and equities surged while the US dollar fell as a result.

US30USD Daily Chart

Source: OANDA fxTrade

  • The US30 index rallied to its highest level in nine days after Powell’s speech, adding the most in one day since October 16
  • The index is rising toward the convergence of the 55- and 100-day moving averages in the 25,594-25,605 area
  • US personal income is expected to rise 0.4% m/m in October after a 0.2% gain in September. Spending is seen unchanged at +0.4% m/m. Spending needs to pick up to give any boost to the economy.

DE30EUR Daily Chart

Source: OANDA fxTrade

  • The Germany30 index edged higher in yesterday’s trading as investors bid up equities amid hopes for a dovish Powell speech. Sure enough, they got one, so the index should rise again today
  • The 55-day moving average is at 11,697 and has capped prices on a closing basis since August 29
  • Consumer prices in Germany are expected to rise at a slower pace of 2.4% y/y in November, data today should show. Slower price increases could help the ECB maintain rates lower for longer and help stocks.

XAU/USD Daily Chart

Source: OANDA fxTrade

  • Gold advanced for the first time in four days yesterday as the US dollar fell after Powell’s speech
  • The commodity bounced off the 100-day moving average at 1,212 for a second straight day. Recall the 55-day moving average crossed above the 100-day moving average on Monday, a medium-term bullish indicator. Trendline resistance may be found near 1,227
  • The release of minutes of the last FOMC meeting early tomorrow Singapore time could disclose whether tapering of rate hikes was discussed. We may get a glimpse of what the Fed thinks the rate horizon will look like in 2019.

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