Powell is pushing markets higher, but there's no sign of a return to normalcy.

The US government has been in a state of government shutdown for fourteen days now, and there's no sign of a return to normalcy. This means most key data hasn't been released. Investors must focus on other issues, and yesterday the Fed chairman provided a powerful impetus.

Deteriorating conditions on the labor market

Jerome Powell emphasized the deteriorating labor market conditions during his evening speech. Because the Fed has access to some research that is not publicly available, markets may assume the economic situation is slightly worse than expected and the Federal Reserve will cut rates at its next meeting. interest rates. Additionally, Powell devoted a lot of time to the issue of the Fed balance sheet, indicating that the process of reducing it will be completed in the coming months.It's hard not to read these signals as positive for the markets, and that's exactly what investors did – indices rebounded, ending a previously mixed session higher, the dollar weakened, and gold climbed back to near-highs.

Powell's speech is particularly important given the lack of inflation data releases that were originally scheduled for today. Even if the paralysis does not end, the report will be published, but only next FridayAt this point, it doesn't seem like either side is interested in ending the political tussle quickly, as this could be the best situation for Democrats before next year's elections, and the Trump administration is using it to implement layoffs, which it previously struggled with.

Earnings season on Wall Street

Earnings season has begun on Wall Street, and investors are currently receiving positive news. The first reports are coming from banks, and overall, they're significantly better than the official consensus, bringing improved results, particularly in the mergers and acquisitions sector. There is also no deterioration in reserves, which could be a negative factor in the economic situation.Additionally, sentiment was boosted this morning by the quarterly report from ASML, a Dutch manufacturer of advanced lithography equipment (essential for semiconductor production). Although sales and earnings are slightly weaker than in the previous quarter, the company maintains its forecasts of strong growth next year, maintaining margins above 50%. In response to the report, we saw a noticeable increase in Nasdaq futures, as the results are being viewed as another barometer of the heated semiconductor market.

There is relatively little happening on the zloty market, and movements will probably be the result of developments in the EUR / USD, where we started the week with a test of the 1,1550-1,16 support zone. A breakout of this zone would have been a chance for a larger rebound in the USD/PLN exchange rate, but as I mentioned earlier, Powell's speech postponed that prospect. Today, more US bank earnings reports, the release of the Fed's Beige Book, and the NY Fed regional index are on the agenda. These publications typically don't attract market attention, but in the absence of key reports, things might change. At 8:05 AM, the euro was trading at 4,26 złoty, the dollar at 3,66 złoty, the pound at 4,90 złoty, and the franc at 4,58 złoty.

Source: Dr. Przemysław Kwiecień CFA, XTB