US dollar hurt, as Fed Powell pledges loyalty over economy

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US dollar hurt, as Fed Powell pledges loyalty over economy

Fed Chair, US dollar, Euro and US shares trending points

  • The US dollar had been dumped by Federal Reserve Chairman Jerome Powell, later on Friday European trading session, as he had quoted saying that the US central banks would be more sensitive before raising interest rate again
  • Followed by the dovish rate talk, the US dollar had fallen against most of the major currencies including Euro and GBP, expect a 0.7 percent raise against JPY after the Forex Flash Crash in to 104.92.
  • The Euro closed the market 0.09 percent higher, while the Australian posted the biggest gain of 1.6 percent, after bottomed in to the 0.6980 territory, its multi-month low against USD.

US dollar hurt, as Fed Powell pledges loyalty over economy

Later on, Friday, earlier on US trading hours, the Fed Chair, Jerome Powell seemed to seal the fate of American dollar for the next couple of weeks, as it fell from its sentimental support level at 96.05.

The American Dollar retreated against most of the currencies on Friday, giving up earlier gains. As Fed Chair had been quoted saying that the central bank would be patient and argus-eyed to watch how the economy evolve and they would be more patient before hiking rate again, the US shares started to skyrocket.

Analysts from all over the world blamed the cautious tone in Powell’s voice behind the US dollar’s softness. The Euro closed the week on 1.1399, after tearing apart below 1.1350 region at one point of the day and GBP was at 1.2728 during the weekly closure.

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The Australian dollar posted the biggest gain with a 1.6 percent upsurge, after breaching its critical support level at 0.6980.

However, followed by the announcement of dovish rate talk and a wishful thought of improving US-China trade relation over the Beijing meeting on January 7th-8th, the US stocks jumpstarted. At Friday US market closure, the Standard & poor 500 had been 3.43 percent up and the Dow Jones Industrial had posted a gain of 3.29 percent.

While the upswing was led by the US tech stocks, the tech-heavy Nasdaq Composite posted a solid gain of 4.78 percent, after plunging terribly over the fall of so-called safe haven FAANG stocks (Facebook Inc., Amazon Inc., Apple Inc., Netflix Inc., Google Inc.)

Dow Jones Industrials daily chart

Dow Jones Industrial daily chart

Standard & Poor 500 daily chart

Standard & Poor 500 daily chart

Nasdaq Composite daily chart

Nasdaq COmpasite daily chart

Bottom Lines 

At this standpoint, the gains in the Wall St. is likely to persist, and Monday Asia Pacific session might experience an altered depiction on the hope of US-China trade talk. While the European shares posted their biggest intra-day gain on Friday, Jan. 4th, the upsurge in Europe is highly unlikely to meet with an early pause.

Critically, the US stocks might keep surging, as the Fed Chair had negated the risk involved with interest rate hike and there had been significant improvement in the trade talk between US and China.

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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

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