A weaker dollar and gold records. Powell reiterated the Fed's guidance

Another upward session on Wall Street is behind us. Investors were buying risk again. Stocks rose while U.S. bond yields fell across the yield curve. The dollar lost a EUR / USD exchange rate rose above the level of 1,09. Gold sets another record above USD 2160/oz.

Markets listened closely to Fed Chairman Jerome Powell's comments during his first day of congressional testimony. He told U.S. lawmakers that the Fed is in no rush to cut interest rates, but the cycle of reductions will most likely start this year.

The inflation target is uncertain

Fed Chair Jerome Powell reiterated the Fed's interest rate guidance from its January meeting, saying that "our interest rate is probably at the high end." He said that "if the economy continues to grow as expected, it will probably be appropriate to begin tapering policy at some point this year." However, Powell also said that "the economic outlook is uncertain, with continued progress towards 2%. inflation target is not certain. He also noted that commercial real estate risks are 'manageable'. He added that the Fed would likely make "broad and significant changes" to its plan to require large banks to hold more capital. The dollar reacted to these statements with depreciation and EUR/USD broke through the level of 1,09. The upward impulse that started in mid-February continues.

From the macro data, we received two reports on the labor market. The job offers and employee turnover survey (JOLTS) showed a decline in vacancies to 8,863 million (consensus 8,85 million) compared to a downwardly revised 8,889 million in December from 9,026 million initially. The ratio of the number of new jobs to the number of unemployed people remained at 1,4. The dropout rate dropped to 2%. with 2,2 percent in December. Employment in the private sector according to ADP increased by 140 in February. (forecast 150 thousand).

The zloty strengthened against the dollar and euro

The Governing Council of the ECB meets today and the market consensus assumes that the central bank will keep interest rates unchanged and the central bank deposit rate will remain at 4%. The OIS market estimates a rate cut of 23 bp by June and a total of 92 bp by the end of 2024. For comparison, Fed Funds Futures contracts indicate a reduction in interest rates by 21 basis points by June and by 88 bp in total by the end of 2024.

At its March meeting, the Monetary Policy Council decided to keep all interest rates unchanged. This decision is in line with market expectations. The zloty strengthened against the euro and the dollar. The EUR/PLN exchange rate reached a minimum of 4,2885 and the USD/PLN pair decreased to 3,9395. The reference rate is still 5,75%. The speech of Adam Glapiński, the head, is scheduled for 15 p.m. on Thursday NBP.

In terms of political events, it is worth noting that former President Donald Trump won 14 of the 15 Republican primaries during the so-called "Super Tuesday". Nikki Haley, former South Carolina governor and ambassador to the United Nations, has withdrawn from the presidential race, clearing the way for a Trump-Biden rematch.

It shows incredible strength gold. This morning, further historical records are being set just above the level of USD 2160 per troy ounce. The raw material is gaining due to the prospect of interest rate cuts. by major central banks. The environment of increased inflation also has a positive impact on valuation.

Source: Łukasz Zembik, OANDA TMS Brokers