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Fed’s Powell Testifies, EIA Crude Inventories, U.S. 10-Year Bond Auction

calendar 10/07/2024 - 08:42 UTC

The U.S. dollar saw a modest increase in value compared to most other major currencies on Tuesday, with the dollar index (USDX) breaking above the tight range of 104.49 and 104.79 seen in the last few sessions, closing the day at 104.82. Investors digested a testimony by Fed Chair Jerome Powell where he commented on the recent weakness seen in economic data, without giving any clear indications on when the central bank could begin cutting rates.

Still, traders are maintaining bets on a September cut as seen in the CME FedWatch tool, with the likelihood at 70%. Expectations for a rate cut in November also remain significant at 51.8%.

In other news, the yen lost more ground against the dollar on Tuesday, pressured by weak economic reports that give less room to the central bank to intervene with rate hikes. Data on Wednesday showed Japanese producer price index inflation picked up slightly in June, with the year-on-year rate rising to 2.9%, however, month-on-month PPI inflation grew less than expected at 0.2%.

In the cryptos space, Bitcoin is seen recovering after it was beaten down with losses of more than 10% in the last month, amid a heavy bitcoin miner sell-off and the initiation of repayment by Mt.Gox to its creditors in relation to the 2014 exchange incident that resulted in the loss of 850,000 Bitcoins held by 240,000 users. Traders fear the distribution could manifest heavy selling.

Wall Street continues to show positive momentum, with the US 500 posting a fifth-straight record high as the latest testimony from Federal Reserve Chair Jerome Powell didn't sway investors from bets on a first rate cut in September.

Some price action could be observed in Jerome Powell's testimony, later today, however, the main focus lies with Thursday’s consumer price index data that could have a big impact on the Feds upcoming decisions.


The EUR/USD pair closed near 1.0800, marking a 0.15% decrease following market disappointment with Federal Reserve (Fed) Chairman Jerome Powell’s testimony before the US Congress on Tuesday.

While the Fed acknowledged improvements in inflation, its cautious approach caught the markets off guard, dampening expectations for a change in the Fed's stance.

Market activity for the remainder of the week will likely be influenced by the US Consumer Price Index (CPI) inflation data scheduled to be released on Thursday.

Additionally, early Thursday will see the release of German Harmonized Index of Consumer Prices (HICP) inflation figures, with year-over-year German inflation in June anticipated to remain stable at the previous 2.5% reading.



Gold prices saw minor gains on Tuesday, holding firm in the face of a stronger dollar and climbing bond yields. Investors are eagerly anticipating the release of U.S. June inflation data later this week, in hopes of gaining more insight into the future path of U.S. interest rates.

There is a prevailing expectation that the Federal Reserve is increasingly likely to begin cutting rates as early as September, which is having a positive impact on current market conditions.

Attention is now turning towards the release of the consumer price index (CPI) data on Thursday, with recent figures indicating a cooling from the unexpectedly high levels seen at the beginning of the year.



Oil prices experienced a decrease on Tuesday as reports indicated that the extended supply disruptions resulting from Hurricane Beryl were less likely, following minimal storm damage to a U.S. oil-producing hub in Texas. Although some offshore U.S. production sites were evacuated, ports were closed, and refining operations slowed down, major refineries along the country's Gulf Coast appeared to have been minimally impacted after Beryl weakened into a tropical storm.

Oil investors also had a mixed reaction to comments by Federal Reserve Chair Jerome Powell, who told a Congressional hearing on Tuesday that the economy was no longer overheated and that the job market had eased. Despite indicating a possible nearing of interest rate cuts, oil prices sank farther after the remarks as a weakening economy could hinder crude demand.


US 500

U.S. stock futures moved in a tight range on Tuesday, ending the session with minor losses.

Testimony from Federal Reserve Chair Jerome Powell saw markets largely stick to their expectations for a September interest rate cut, even as Powell did not appear to have directly telegraphed a cut. The Fed Chair is set to testify further on Wednesday.

The US 500 and the US Tech 100 achieved new all-time highs on Tuesday; however, the rate of their gains seemed to be slowing down significantly. The upturn was mainly driven by prominent technology stocks, reflecting the ongoing excitement surrounding artificial intelligence.

In addition to Thursday’s CPI data, this week's focus is firmly on the commencement of the second quarter earnings season, as a number of major Wall Street banks are slated to release their reports on Friday.

US 500

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