Market Wrap – Market awaits Powell

Wall Street remains in the red as traders are preparing for the US Federal Reserve Chair Jerome Powell’s speech at the Washington Economic Club at around 17:00 GMT today.

Investors are looking for Powell’s to pivot somewhat following a strong jobs report released last Friday that witnessed the US economy adding 517,00 jobs in January vs. expectations of almost 200,000.

Also, the Unemployment Rate in the United States dived to 3.4% from 3.5%. All-in-all such a tight labour market would warrant further tightening by the Fed.

Earlier today, Minneapolis Federal Reserve President Neel Kashkari told CNN Tuesday that the labour market is still too hot and that it makes it harder to bring inflation down”.

Kashkari said “We may have to hold rates at a higher level for longer,” Kashkari added and said that he is not forecasting a recession.

Earlier in the day, Kashkari also told CNBC that they are totally committed to getting inflation back to the 2% target.

As the market await Chair Powell CitiFX have said that “We see hawkish risks from Fed Chair Powell following the payrolls beat on Friday.”

And they also noted that “Overall, the FOMC and the data points to the status quo as of the December , but we suspect the next set of data probably point to hawkish risks relative to the base case.”

Bank of Canada Governor Tiff Macklem is also speaking today at around 17:30 GMT. The central bank announced a pause after lifting rates to 4.50%.

Therefore, any dovish hints could pave the way for further upside in the USDCAD, however, much will depend on Powell’s comments also.