Intraday Market Thoughts

Charts Held up by Powell's Fundamentals

by Ashraf Laidi
Jul 11, 2019 12:46

It was another blatant example of fundamentals rushing to line up with technicals. Just as the pain suffered by USD shorts was escalating on Tuesday, Fed Chair Powell's Wednesday testimony turned the table around. To those starting out in currencies, this is not the first time the US dollar stood at multimonth highs or cycle highs -- such on Tuesday-- only to be whipsawed 24 hrs later by a Fed-related event. This is also frequent in the case of the euro and the ECB, when the currency pushes near extremes ahead of a key event. US CPI up next. List of today's Fed speakers with times (see below)

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Charts Held up by Powell's Fundamentals - Gold Spx Jul 11 2019 (Chart 1)

No, no.. Powell's main objective is NOT to talk down the US dollar. Rather, he simply reminded markets of might have been lost on them -- That rate cuts are coming, even as the NFP part of the Friday's US clouded traders' judgments (or erased their memory of the clearly dovish twist at the last FOMC meeting). 

What does it all mean to traders? 2 hours prior to Powell's testimony, I issued a special video for subscribers highlighting the stress points in FX and focusing on the importance of the similarity of point "R2" and its implications for the 3 Premium trades in USD pairs and metals. As we speak, EURUSD is testing 1.1280 ahead of US CPI, while GBPUSD leads near 1.2570s. Tune in for the 2nd day of Powell's testimony (to the Senate). 

Here's the list and times of today Fed speakers: (all times are London or NY +5)

Williams 16:10 Bostic 17:15 Barkin 17:30 Quarles 18:30 Williams 18:30 Kashkari 22:00

Act Exp Prev GMT
Fed Chair Powell Testifies
Jul 11 14:00
FOMC's Quarles Speaks
Jul 11 17:30

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