European open – Markets flat ahead of Powell

Will Powell satisfy investors craving for cuts?

It’s shaping up to be a relatively slow morning in European trade, as investors await the first testimony from Fed Chairman Jerome Powell.

Source – Thomson Reuters Eikon

Powell is due to appear before the House Financial Services Committee to testify on the semi-annual monetary policy report, an appearance that comes at a time when the Fed’s policy direction is both crucial and unclear.

This year, the Fed has effectively become the only game in town, as far as investors are concerned. Growing trade tensions between the US and China, a murkier global economic outlook and more modest performances from corporate America have left investors feeling anxious. The economy alone can no longer support the stock market which has forced the Fed to play a more active role and likely reverse some of its tightening of last year.

The Fed has reluctantly opened the door to doing so but market pricing is quite aggressive and the central bank is yet to either catch up or better manage expectations, perhaps out of fear of the market repercussions and backlash that would inevitably follow from the White House.

Either way, all eyes will now be on Powell who will likely be heavily grilled on the central banks intentions. I’m sure we can also expect the odd dose of harsh criticism from certain politicians loyal to Trump.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam