US FED Chair Jerome Powel to testify before US Congress (Wednesday, July 10 at 15:00 GMT+1) - 09/07/2019

Micro Analysis

09 July, 2019

For General Information only. Not Intended to Provide Trading or Investment Advice. Your Capital is at Risk.

US Fed Chair Jerome Powell is expected to appear before the US Congress on Wednesday (15:00 GMT+1) in a regular semi- annual testimony on Fed monetary policy. Mr. Powell will speak just a few days after the June Employment Market data, which showed that the Labor market in the US is still solid and steady. Analysts are expected to get better clues on whether Powell’s testimony will keep to market expectations that the Fed will cut its benchmark interest rate in July by 25 basis points. According to Bloomberg Terminal, the market currently is pricing in 100.0% probability rate that there will be an interest rate cut of at least 25 basis points in late July and very poor 2.5% probability rate of a 50 basis points interest rate cut. Nonfarm Payroll data for June (224K vs. 160K exp.), however, could make Fed prolong its highly anticipated monetary policy easing steps further into the second half of 2019 as FOMC policymakers may want to seek more data to justify possible monetary policy adjustments. If Powell’s testimony provides signals that the Fed will keep its monetary policy unchanged in late July, the US dollar can be then expected to rise in value, while Gold prices could be expected to fall, as well as major US Stock Indices.

US Inflation Data for June (Thursday, July 11 at 13:30 GM+1)

Struggling inflation growth in the US has been lately a painful thorn in the eyes of many investors as it failed to live up to Fed expectations. To this end, our team believes that after last week’s employment market data, this week’s inflation data for June will also be very important in markets determining the Fed’s next move. For the record, U.S. consumer prices barely rose in May. The consumer price index edged up 0.1% in May. In the 12 months through May, CPI increased 1.8%, slowing from April’s 1.9% gain. Economists polled by Reuters had forecast CPI would rise 0.1% in May and 1.9% year-on-year. In the 12 months through May, Core CPI rose 2.0% after advancing 2.1% in April.

What do the markets expect?

As market participants continued to fear a possible interest rate cut in July, Powell’s testimony and June’s Inflation data could clarify whether the markets have gone too far ahead with their expectations, or will prove themselves right once again. If wrong, the US dollar could gain in value, while Gold prices should be expected to fall. To this end, we have selected eight instruments which will closely watched by traders this week.

Technical Levels for the Most Traded Instruments

Support and Resistance Levels

EUR/USD

GBP/USD

USD/JPY

AUD/USD

USD/CHF

USD/TRY

Gold

USA500

Resistance 3

1.14014

1.27602

110.646

0.71164

1.01069

6.01725

1479.54

3037.41

Resistance 2

1.13608

1.27021

109.768

0.70811

1.00275

5.90145

1458.44

3020.49

Resistance 1

1.12846

1.25875

109.274

0.70108

0.99825

5.81585

1425.65

2992.41

Pivot

1.12440

1.25294

108.396

0.69755

0.99031

5.70005

1404.55

2975.49

Support 1

1.11678

1.24148

107.902

0.69052

0.98581

5.61445

1371.76

2947.41

Support 2

1.11272

1.23567

107.024

0.68699

0.97787

5.49865

1350.66

2930.49

Support 3

1.10510

1.22421

106.530

0.67996

0.97337

5.41305

1317.87

2902.41

Share It With Your Network
Ready for trading?Start Now
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.