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Market Insights

This week’s trading wrap up after FED

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You confuse what I mean with what I say

This could be a great sentence for some of us that are spending several hours a day talking to others, and in the end, one is not even knowing what he is saying, probably very different to what he meant to say.

Last night Mr. Powell, the President of the Federal Reserve, made some interesting remarks about the Fed’s decision to move up the interest rates by 75 basis points.

Surely he said what he meant. And the Fed’s view has been modified recently due to the good stance of the US economy and the persistance of an uncontrolled inflation. The approach is more hawkish than before: we shall do what we need to do in order to subdue inflation, even if it means reasing interest rates above 3% this year, next year and the year after.

He examined the different economic areas, from production to wages or housing, and his remarks were sound and clear. He meant that inflation is the enemy to beat, and the Fed will take all necessary measures to have it controlled. Although across the week there was an increasing expectation of such a drastic move (75 points had not been risen since 1994), the immediate reaction was a bit surprising.

S&P 500, 5-minute candle chart, Wednesday on Fed’s decision, Skilling MT4 Platform

Initially the S&P 500 reacted upwards, to drop two minutes later and end the fist 5-minute candle 25 points lower. The second candle push it downwards to 3737, but ended in 3757. After this, the price started oscillating up first and down later, hitting a 3722 low just when Powell started his Press Conference. And through his comments, the S&P 500 moved strongly up, with some further retracements, touching 3842 points at its highest level.

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In fact, S&P500 closed 1.46% up, Dow Jones 1.00% and Nasdaq 2.50%.

It is interesting to observe these movements, because they usually reflect what the feeling of the professional traders in place tells them, plus the superfast analysis of their AI software detecting changes in the wording Powell is expressing and therefore anticipating potencial impulses.

Clearly, that is not a timeframe for us mortal traders, which can be caught in the middle of quick price swings and with no robust tools to handle it. But it is certainly impressive.

On Thursday mid-day S&P500 is 3.36% down, Dow Jones 2.61% & Nasdaq 4.10%.

The European markets are suffering relevant losses too, DAX 3.34% down (its lowest since March 8 this year), CAC 2.37%, FTSE 3.00% and IBEX 1.16%.

The Bank of England has hiked 25 points the interest rates in the UK, as expected.

On the forex side, we have the EURUSD dropping 0.44% to 1.0395 at the time of preparing this report. USDJPY down 0.50% to 133.16 and GBPUSD also down 0.85% to 1.2077.

Gold, daily candle chart, Skilling MT4 Platform

Gold is gaining momentum after a Thursday morning downwards trend that was pricing it at 1818 ounces per dollar. Mid-afternoon price is now 1834 dollars.

However, it has been moving laterally for several weeks now, with a low at 1786 a month ago and since then trying to recover and coming back down again in the last days.

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Brent Oil Future daily candle chart, Skilling MT4 Platform

Brent futures have been steadily moving up since the beginning of May, reaching slightly above 123 dollars per barrel last seen over the start of the Russian invasion of Ukraine.

But the last six days with the exception of last Monday, have shown a drop that was pricing it at a low close to 110 dollars. However, the evening session on Thursday has pushed it up to 113.70 dollars again.

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Bitcoin, daily candle chart, Skilling MT4 Platform

The Crypto world is suffering a lot, with most of its relevant assets losing a very significant share of their prices just three months ago. As an example, Bitcoin is at 21,000 dollars, when was well above 48,000 in March 28.

The Celsius issue, temporarily stopping all transactions and looking for liquidity, has stamped a HIGH RISH mark on these assets;just when it seemed that they were to be the new alternatives to the standard markets, according to several voices some months ago.

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Volatility is growing back, which normally increases the grade of risk in most markets.

With important data being published next week including German PPI, Existing Home Sales in the US, UK’s CPI & PPI, Manufacturing PMIs in Europe and the US and UK’s retails sales and Germay’s IFO, d the entertainment is guaranteed just by watching the price movements.

Not investment advice. Past Performance is not indicative of future results. Trading cryptocurrency may not be available depending on your country of residence.

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