Less Hawkish Fed Sends USD Lower

How did you like the Fed’s Day yesterday? Seems like the day didn’t disappoint traders. Although the rate rise was in line with expectations, Jerome Powell’s statement was a bit less hawkish than expected. At least that’s how traders received it.

The US Dollar weakened and indices went higher – pretty much a standard reaction to a dovish or less hawkish FED. Although the DAX lost everything in the early hours of the European session, Germany is now also in a huge energy crisis, which strongly affects, or will soon affect, German companies.

Quite a large part of yesterday’s press conference was about whether or not we’re in a recession. Of course, Jerome Powell doesn’t believe we are and the discussion points came down to semantics: What is a recession, really?

I’m not sure how relevant that discussion is to people losing their jobs and homes, but apparently, it’s important for central bankers to define things extremely accurately. Nevertheless, today’s GDP print from the US will help us find out if we’re aiming towards a recession or not. A 0.4% print is expected and any bigger difference in both sides should spark huge volatility.

Earnings season does not slow down. Meta disappointed yesterday with missed revenue targets, and discouraging forecasts for next quarter. Today, we have some heavyweight players on the calendar too, and we’ll find out the results from Apple, Amazon, Mastercard and Nestle.

As we anticipated in yesterday’s piece, commodities continue the move upward supported by the weaker USD. Gold is calmly aiming for the 1790 USD/oz resistance and brent oil is trying to finish off the inverse head and shoulders formation, which would give us a strong buy signal. Once the price closes a day above the 109 USD/oz mark, the job will be done and a strong buy signal will be triggered.