Market Wrap – Powell Chatter Moves Markets

The market focus was central bank speak during the US session, and the action did not disappoint as we saw Chair Powell moving the market and BOJ Governor Ueda trying to jawbone the Yen higher.

During the session we saw broad based US dollar strength as the FED talked up rate hikes and we also saw a turnaround in US equity markets as the major indices broke their recent losing streak.

Powell noted “We believe there is more restrictive policy coming” and noted that “If you look at the data over the last quarter, data on jobs, inflation and activity is all strong.”

Importantly, the Federal Reserve Chair added that “We have not made a decision to hike at every other meeting. I would not take moving at consecutive meetings off the table”.

On the economy he noted that “We need to see more softening in the labour market” and also “The services sector isn’t particularly interest-rate sensitive”.

Bank of Japan Governor Ueda noted “We’re monitoring the situation with the yen very carefully but it’s the jurisdiction of the ministry of finance”.

He added that “If you want a 2% inflation rate, you want wage inflation that’s slightly or well-above 2% to match productivity growth, so there’s still some ground to cover”.

He touched on the Japanese yen currency when he said that “Yen is being influenced by many factors, including the policy of these other central banks”.

We also saw the release of US weekly crude oil inventories, and they came in at -9.603 million versus -1.757 million estimates. Crude oil came in at -9.603 million versus -1.757 million estimates.