HomeContributorsFundamental AnalysisQuiet Market Before Powell Jackson Hole Speech

Quiet Market Before Powell Jackson Hole Speech

There is a lower level of market volatility at the end of the week, with investors on stand-by mode before Federal Reserve Chair Jerome Powell speaks at Jackson Hole later today.

Traders are probably on the edge of their seats wondering whether Powell will respond at all to the criticism from U.S. President Trump towards US interest rate policy earlier in the week, but the most market-friendly way to respond to such comments would be to ignore them. The Federal Reserve does remain set on raising U.S. interest rates again next month, and there is no reason for the Fed to deter from this path. I personally doubt that he would acknowledge the comments made by President Trump during Jackson Hole.

Powell might be able to create some volatility for traders if he highlights the potential impact of ongoing trade tensions to the global economy. There are indications that the global economic outlook is slowing when compared to this time last year, and the latest FOMC Minutes released this week did create a picture that Federal Reserve policymakers are concerned about the prolonged trade tensions. If Powell suggests that these concerns over trade tensions could also weaken the US economic outlook, this would represent a risk for the Dollar.

Elsewhere, a threat for financial market volatility would be if Jerome Powell takes an unexpected turn towards offering monetary guidance on what the outlook for 2019 could bring. The market is already pretty much set-on for the Federal Reserve to raise US interest rates next month with the door also remaining open for a potential US interest rate increase before the year concludes.But there isn’t much guidance on what to expect next year. It might be a little premature at this stage to speculate, but if Powell suggested that 2019 would bring a less active approach towards raising US interest rates this would beseen as a negative for the US Dollar.

The FXTM brand provides international brokerage services and gives access to the global currency markets, offering trading in forex, precious metals, Share CFDs, ETF CFDs and CFDs on Commodity Futures. Trading is available via the MT4 and MT5 platforms with spreads starting from just 1.3 on Standard trading accounts and from 0.1 on ECN trading accounts. Bespoke trading support and services are provided based on each client's needs and ambitions - from novices, to experienced traders and institutional investors. ForexTime Limited is regulated by the Cyprus Securities and Exchange Commission (CySEC), with license number 185/12, licensed by South Africa's FSB with FSP number 46614, and registered with the UK FCA under reference number 600475. FT Global Limited is regulated by the International Financial Services Commission (IFSC) with license numbers IFSC/60/345/TS and IFSC/60/345/APM.

Featured Analysis

Learn Forex Trading