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Markets look to Powell testimony after NFP miss

“I made my first investment at age eleven. I was wasting my life until then.” Warren Buffet

 

 

 

HEADLINES

 

 

 

  • Dollar firm as inflation test looms
  • IMF: Faster Fed rate hikes could rattle financial markets
  • Gold holds steady near 3-week low as markets weigh quicker Fed hikes
  • Oil prices edge up on Kazakhstan, Libyan supply worries
  • Shares, bonds brace for high U.S. inflation, hawkish Fed
  • NFP to encourage expectations for Fed tightening, keeping USD in resilient form – TDS

 

 

 

FOREX

 

 

 

Dollar firm as inflation test looms

 

The dollar started the week with support as traders bet U.S. inflation data and appearances from several Federal Reserve officials would bolster the case for higher interest rates.

After dipping on Friday, the greenback stood around its 200-day moving average against the euro at $1.1357 in early Asia trade on Monday. It firmed slightly on the yen to 115.65 , fairly close to last week's five-year high of 116.35 per dollar.

Trade in the Asia session was thinned by a holiday in Japan.

Federal Reserve chair Jerome Powell and governor Lael Brainard testify before Senate committees this week regarding their nominations as chair and deputy chair at the Fed.

 

IMF: Faster Fed rate hikes could rattle financial markets

 

“Faster Fed rate hikes could rattle financial markets, result in slowing US demand and capital outflows from emerging markets,” International Monetary Fund (IMF) said in a blog post published on Monday.

Broad wage inflation or sustained supply bottlenecks could boost US prices more than expected, trigger faster-Fed rate increases. Continues to expect robust US growth, sees inflation moderating later this year. Expect global recovery to continue in 2022 and 2023, but risks remain elevated by the resurgent pandemic.

 

 

 

COMMODITIES

 

 

 

Gold holds steady near 3-week low as markets weigh quicker Fed hikes

 

Gold was flat on Monday, hovering near a three-week low, as traders awaited December U.S. inflation data that could reinforce the case for earlier-than-expected interest rate hikes by the U.S. Federal Reserve after weaker jobs data.

 

Oil prices edge up on Kazakhstan, Libyan supply worries

 

Oil prices edged up on Monday as supply disruptions in Kazakhstan and Libya offset worries stemming from the rapid global rise in Omicron infections. Oil prices gained 5% last week after protests in Kazakhstan disrupted train lines and hit production at the country's top oilfield Tengiz, while a pipeline maintenance in Libya pushed production down to 729,000 barrels per day from a high of 1.3 million bpd last year.

 

 

 

STOCKS

 

 

Shares, bonds brace for high U.S. inflation, hawkish Fed

 

Major share markets were muted on Monday as investors count down to another U.S. inflation reading that could well set the seal on an early rate hike from the Federal Reserve, lifting bond yields and punishing tech stocks.

The explosion in coronavirus cases globally also threatens to crimp consumer spending and growth just as the Fed is considering turning off the liquidity spigots, tough timing for markets addicted to endless cheap money.

 

 

 

ANALYSIS

 

 

 

NFP to encourage expectations for Fed tightening, keeping USD in resilient form – TDS

 

“We do not think that the disappointment in headline payrolls will do much to undermine the USD. The Fed is on a mission to move into restrictive policy; taper is almost over, lift-off is happening, inflation is very high with evidence of second round price pressures, and QT is all the rage. And, despite the back-up in yields this week, financial conditions remain accommodative especially relative to the growth and inflation backdrop.” “USD/JPY is the best FX expression of Fed policy given it is just a mirror image of the Fed funds futures.

 

 

 

CHART

 

 

 

WTI Crude Oil – Daily Candlesticks

Source: GKFX Prime Metatrader 4

WTISPOT has just reversed from resistance at the 80 round number and the 76.4% Fibonacci retracement of the October-November decline. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

 

 

SOURCE

 

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/nfp-to-encourage-expectations-for-fed-tightening-keeping-usd-in-resilient-form-tds-202201071457
https://www.fxstreet.com/news/imf-faster-fed-rate-hikes-could-rattle-financial-markets-202201100507
https://www.reuters.com/markets/europe/dollar-firm-inflation-test-looms-2022-01-10/
https://www.reuters.com/markets/europe/global-markets-wrapup-2-pix-2022-01-10/
 

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