Both the US$ and stock indices closed higher on Tuesday as Federal Reserve Chairman Jerome Powell expressed an optimistic view on the outlook for the US economy, while some solid earnings bolstered the outlook for a robust reporting period, allowing the Nasdaq to close at an all time high. Treasuries were unaffected by Powell’s upbeat view of life, while Gold felt the heat of the stronger dollar in falling by $12oz, to a new 12 month low of $1226. WTI was choppy but has again ended the day lower, now at 67.60. Powell told Congress that strong US economic growth and stable inflation should keep the Fed on track to gradually raise short-term interest rates, but he also highlighted the growing risks to the economy if the Trump administration’s recent efforts to lower trade barriers result, instead, in permanently higher tariffs.
Wednesday will be a quiet session for Asia, with just the WBC Australian Consumer Confidence to provide any interest. Europe will look to the EU CPI (exp 0.1%mm, 2.0%yy) and the UK CPI, PPI, RPI (CPI, exp 0.2%mm, 2.6%yy; PPI, exp 2.1%yy). The US will see the Fed’s Powell continue his testimony, while in terms of data, the focus will be on the June Housing Starts and Building Permits. Have a good day.
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