Market News

Investors on Edge as Fed President Speaks on Economic Outlook

Fed President economic outlook

Stay informed as investors await insights from the Fed President on the economic outlook, influencing market tensions and financial decisions.

Australia’s latest Labour Force Report has sent shockwaves through the financial markets. The country unexpectedly shed 65.1k jobs, marking the most significant monthly decline since September 2021. This stark contrast to the estimated 15.4k gain has raised concerns about the health of the Australian economy. Despite the significant job losses, the unemployment rate remained unchanged at 3.9%. The Australian Dollar initially plummeted to 0.6525 but rebounded to 0.6560 by the end of the Asia session.

Global Implications for Europe & US Sessions

Federal Reserve Bank of Atlanta President Raphael Bostic’s speech about the economic outlook at the Atlanta Chamber of Commerce has investors closely watching the European and US sessions. If Bostic echoes Governor Christopher Waller’s stance against aggressive interest rate cuts in 2024, the US Dollar will likely experience increased demand.

The Dollar Index (DXY) has been influenced by lower-than-expected unemployment claims in the US, signaling a robust labor market. Analysts suggest another week of lower-than-expected claims could be a bullish catalyst for the greenback.

Key News Events Today

  • FOMC Member Bostic Speaks (12:30 pm GMT)
  • Unemployment Claims (1:30 pm GMT)

Market Outlook

Bostic’s speech and unemployment claim data will likely influence the Dollar Index (DXY), keeping it weak and bearish, while Gold (XAU) shows a weak bullish bias.

Investors on Edge as Fed President Speaks on Economic Outlook

Further Developments Across Major Currencies

  • The Australian Dollar (AUD)

The Reserve Bank of Australia (RBA) maintained the cash rate target at 4.35%, with inflation persisting above the target range. Analysts anticipate the AUD will retain a weak bullish bias. Scheduled for February 6, 2024, the next meeting will take place.

  • The Kiwi Dollar (NZD)

There were no major news events today. The Kiwi experienced a notable drop but found support around 0.6100, indicating a potential retracement higher.

  • The Japanese Yen (JPY)

Anticipating a further easing of Japan’s core inflation rate, the Bank of Japan plans to maintain its ultra-dovish monetary policy stance, thereby keeping USD/JPY elevated.

  • The Euro (EUR)

ECB President Christine Lagarde’s speech at the World Economic Forum in Davos is likely to impact the direction of the Euro. The ECB kept key interest rates unchanged, with a weak bullish bias expected in the next 24 hours.

  • The Swiss Franc (CHF)

SNB Chairman Thomas Jordan’s statements at the World Economic Forum will influence the Swiss Franc. The SNB kept the policy rate unchanged, with a weak bearish bias.

  • The Pound (GBP)

The Bank of England’s Monetary Policy Committee (MPC) voted to maintain the Official Bank Rate at 5.25%, with a weak bullish bias expected.

  • The Canadian Dollar (CAD)

The Bank of Canada kept its target rate at 5.0%, and analysts expect USD/CAD to slide lower before resuming an uptrend.

Oil

EIA Crude Oil Inventories will be closely watched, with an API stockpile building challenging expectations. Despite this, oil prices received a boost from OPEC’s optimistic forecast, leading to a medium bullish bias for the next 24 hours.

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