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Powell Testimony and RBNZ Impact on Europe: Market Watch

Market Watch: Powell's Testimony and RBNZ Impact on Europe

Stay informed on global markets by following the Powell testimony and its impact on currency movements and volatility today.

Asia Session Recap

In the Asia session, the Reserve Bank of New Zealand (RBNZ) maintained its Official Cash Rate (OCR) at 5.5%, per market expectations. Despite efforts to curb inflation, the headline CPI remained elevated at 4.0% in Q1 2024, prompting a brief decline in the New Zealand Dollar (NZD) to 0.6075 following the announcement.

Europe & US Sessions Outlook

Today’s focus shifts to Federal Reserve Chairman Jerome Powell’s testimony before the House Financial Services Committee, concluding the second day of his Semi-Annual Monetary Policy Report. Powell’s remarks are expected to influence the direction of the US Dollar, potentially causing increased volatility across major currency pairs.

Dollar Index (DXY) Outlook

Traders are advised to brace for heightened market movements during Powell’s testimony, which influenced the Dollar Index (DXY) ‘s trajectory throughout the day.

Powell Testimony and RBNZ Impact on Europe: Market Watch

Key Central Bank Developments

Federal Reserve (USD):

  • The Federal Funds Rate target remains unchanged at 5.25% to 5.50%.
  • The Fed closely monitors inflation, aiming for a sustainable return to its 2% target.
  • Asset purchases will decline, reflecting ongoing economic assessments.

European Central Bank (EUR):

  • Recently reduced key interest rates to combat economic pressures.
  • The inflation outlook remains elevated, posing challenges despite recent declines.
  • Central banks expect to adjust policies based on economic data and inflation trends.

Bank of England (GBP):

  • Maintained Official Bank Rate at 5.25%, signaling economic stability amid inflationary pressures.
  • GDP growth exceeded expectations, supporting the Pound’s resilience.

Market Expectations Today

Gold (XAU):

  • Influenced by Powell’s testimony, with potential for volatility in precious metal prices.

Australian Dollar (AUD):

  • Trading within defined ranges, influenced by domestic economic stability.

Japanese Yen (JPY):

  • Maintaining weak levels against the Dollar, with support and resistance levels noted.

Canadian Dollar (CAD):

  • Impact of recent Bank of Canada rate adjustments and economic indicators on USD/CAD movements.

Oil (Crude):

  • EIA Crude Oil Inventories data to influence market sentiment, despite recent declines in WTI prices.

Today’s trading sessions in Europe and the US are heavily influenced by Jerome Powell’s testimony, expected to steer global market sentiment and currency movements. Traders should remain vigilant amid potential shifts in monetary policy expectations and economic outlooks across major economies.

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