Morning Brief – Market React To FED comments

The market has staged a fairly muted reaction to the Federal Reserve Governor Christopher Waller’s comments over the weekend, as he became the latest U.S. central banker to pledge a whatever-it-takes approach to fighting inflation.

In general, the market action is slow because of the Juneteenth Holiday in America, however, just three days after the Fed raised interest rates by three-quarters of a percentage point and another FED members are signalling more hikes to come.

This is significant because the scale of the rate hikes that Waller is supporting. Recently, FED member Bostic also showed his support with the Fed’s 75 basis point move, saying, “Inflation is not declining, implying that policy must be stronger.” And “We will adjust policy based on data as needed.”

In terms of market action stocks are not showing any huge price fluctuations on the news, and it is very much holiday trading mode for the entire market on Monday.

It appears that all the action is in crypto at the moment. As Bitcoin crashed towards the $17,600 level over the weekend, and subsequently staged a $3,000 price recovery.

Other cryptos, such as Ethereum, Ripple, and Litecoin have also staged large recoveries. It is still questionable whether the downtrend is entirely over in crypto.

The US dollar appears to be a key beneficiary of the hawkish comments from Waller over the weekend. We are seeing the greenback making gains against the euro and the yen currencies.

Gold continues to flirt with its 200-day moving average, around the $1,840 level. Traders appear undecided about the direction of gold at this juncture in time.

This week the markets focus will be on FED Chair Jerome Powell again, as he testifies before the House and the US Senate. Markets could consolidate until he starts speaking.