At the last Jackson Hole Symposium Jerome Powell expected inflation to be transitory. He also told participants that he saw little evidence of wage increases at the time that might threaten excessive inflation. It is reasonable to expect Jerome Powell to be very firm that the Fed will keep hiking interest rates in order to control rising inflation.
The reaction to Powell’s comments will be crucial for the USD, bonds, and precious metals. If Jerome Powell stresses slowing growth and a Fed ready to pause rates that should send the USD lower, yields lower, and gold higher. Bear this strong pattern in gold in mind in case of a favourable upside environment.
Major Trade Risks: If on the other hand, Jerome Powell stresses that the Fed needs to hike rates at a quicker pace then that should send the USD higher, yields higher, and gold lower.
HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.