Fed Chair Powell’s testimony

Fed Chair Powell testified before Congress yesterday. According to various media outlets, Fed Chair Powell implied that the bank is not in a rush to cut interest rates. Moreover, the Fed Chair stated that the US job market is “solid” and that the unemployment rate “has stabilized at a low level in recent months” per the AP. Overall, it appears that the Fed Chair’s comments may be relatively hawkish in nature, as the implications of keeping interest rates steady for a prolonged period of time i.e a more gradual rate cutting path, could potentially aid the dollar. In other news, we turn our attention to the release of the US CPI rates for January later on today. Economists are currently expecting Core inflation on a year-on-year basis to showcase easing inflationary pressures in the US economy, with the expected figure being 3.1% which would be lower than the prior rate of 3.2%. In our view, a lower Core CPI rate would be welcome, as it may imply easing inflationary pressures. Yet, the rate still remains elevated and thus the Fed may require further confirmation of easing inflationary pressures before engaging in a predominantly dovish rhetoric. Nonetheless, the release should it come in as expected could potentially weigh on the dollar. On the flip side, should the Core CPI rate on a YoY basis come in higher than expected and thus imply stubborn or even an acceleration of inflationary pressures, it may then aggravate calls for the Fed to remain on hold for an even greater period of time, which may aid the greenback. Over in Europe, European Commission President Ursula Von Der Leyen stated per Bloomberg yesterday that “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures” which may imply that the European Union is gearing up for a trade war with the US.

The S&P 500 appears to be moving in a predominantly sideways fashion. We opt for a sideways bias for the index, despite the RSI indicator below our chart ticking upwards and closing on the 60 figure, which may imply bullish market tendencies. Nonetheless, for our sideways bias to be maintained we would require the index’s price to remain confined between the 5930 (S1) support level and the 6100 (R1) resistance line. On the flip side for a bullish outlook, we would require a clear break above the 6100 (R1) resistance line with the next possible target for the bulls being the 6250 (R2) resistance level. Lastly, for a bearish outlook we would require a clear break below the 5930 (S1) support level, with the next possible target for the bears being the 5770 (S2) support base.

WTICash appears to be moving in a sideways fashion after remaining above our resistance turned to support at the 71.75 (S1) level. We opt for a relatively sideways bias for the commodity’s price and supporting our case is the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. For our sideways bias to be maintained we would require the commodity’s price to remain confined between the 71.75 (S1) support level and the 76.80 (R1) resistance line. On the flip side we would immediately switch our sideways bias in favour of a bearish outlook in the event of a break below the 71.75 (S1) support level, with the next possible target for the bears being the 66.20 (S2) support line. Lastly, for a bullish outlook we would require a clear break above the 76.80 (R1) resistance level with the next possible target for the bulls being the 81.60 (R2) resistance line.

その他の注目材料

Today we note the release of the Czech Republic’s final CPI rate for January, the US CPI rates for January, and the US weekly crude oil inventories figure. In tomorrow’s Asian session, we note Japan’s corporate goods prices rate for January. On a monetary level, we note the speeches by ECB Elderson, BoE Meghan Greene, and Atlanta Fed President Bostic and we would like to highlight Fed Chair Powell’s testimony.