By Han Tan Market Analyst, ForexTime
Over the past two weeks, global investors have been gripped by key central bank policy meetings. Markets have been hungry for clues about how the US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan, intend to adjust their respective policies.
These major central banks have been buying up billions of dollars’ worth of bonds, and even ETFs, to support their respective financial markets. Given the forward-looking nature of the markets, investors are already trying to pre-empt when these policymakers would pare back those bond purchases, and such shifting expectations have rocked multiple asset classes, from US Treasuries, to the Dollar, and even tech stocks on the Nasdaq 100.
And of course, investors and trader are never fully satiated. Just because the interest rate decisions are over for the time being, doesn’t mean traders and investors can take their eyes off central banks.
This week heralds a smorgasbord of more speeches and panel discussions by key figures:
Monday, 22 March
Free Reports:
Download Our Metatrader 4 Indicators – Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
- Fed Chair Jerome Powell speaks at BIS Summit
- Fed speak:
– Richmond Fed President Thomas Barkin
– San Francisco Fed President Mary Daly
Tuesday, 23 March
- Fed Chair Powell and Treasury Secretary Janet Yellen to deliver joint testimonies about pandemic response policies
- Fed speak:
– St. Louis Fed President James Bullard
– New York Fed President John Williams - BOE speak:
– Governor Andrew Bailey
– Chief Economist Andy Haldane
– Deputy Governor Jon Cunliffe
Wednesday, 24 March
- Powell and Yellen joint testimonies about pandemic policies
- Fed speak:
– Williams
– Daly
– Chicago Fed President Charles Evans
Thursday, 25 March
- ECB President Christine Lagarde and BOE Governor Bailey speak at BIS Summit
- Fed speak:
– Williams
– Evans
– Daly
– Atlanta Fed President Raphael Bostic
– Fed Vice Chair Richard Clarida
All these scheduled speeches should keep traders and investors occupied over the coming days, especially when it comes to the Fed speak. As I had stated last Friday:
The slew of Fed speak in the upcoming week could also act as a volatility trigger point, especially if any of the officials offer different views from what had been conveyed by the Fed Chair himself after (last) week’s FOMC meeting.
Dollar in focus
From a technical perspective, the FXTM USD index has the potential to enjoy more near-term gains, seeing it has yet to reach the upper band of its Bollinger band (black broken lines). The 50-day simple moving average (SMA) is set to act as its immediate support level. Traders will be offered a stronger bullish signal if this USD index can breach its 100-day SMA (green line) and secure a meaningful breakout out of the downward trend (red lines) that has firmly been in place since March.
Note that the FXTM USD index is an equally-weighted index comprising the following major pairs:
Looking beyond the charts, the US Treasury has over US$180 billion worth of notes to be auctioned off this week. Poor demand for these government bonds could send yields skyrocketing even higher!
Those rising yields resulting from the selloff in Treasury markets have in turn encouraged more demand for the US Dollar. The dollar’s recovery has then weighed on demand for precious metals, such as gold, which have an inverse relationship with the greenback.
Should Treasury yields keep rising and offer support for the US dollar, that should ensure that gold bulls are kept on a tight leash, making it harder for them to push spot gold higher.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
- The British index has updated the historical maximum. Oil lost 5% over the week May 3, 2024
- US Fed tilts towards a rate cut despite the postponement. HKMA left the rate unchanged at 5.75% May 2, 2024
- Brent crude oil hits seven-week low May 2, 2024
- Target Thursdays: USDJPY, Copper & EURCAD May 2, 2024
- WTI oil declines on rising inventories and negotiations between Israel and Hamas. Rising unemployment in New Zealand may force RBNZ to start cutting rates earlier May 1, 2024
- Bitcoin stumbles below $60k ahead of Fed May 1, 2024
- Expert Says Now Looks Like a Good Time To Buy This Renewable Energy Stock Apr 30, 2024
- Optimism over corporate earnings is fueling stock indices. The Hong Kong index reached a 5-month high Apr 30, 2024
- FXTM’s Copper: Hits fresh two-year high! Apr 30, 2024
- European indices grow on the ECB’s “dovish” position. Quarterly reports of mega-companies support the broad market Apr 29, 2024