Futures linked to major Wall Street indices bounced off daily lows , while dollar erased some of the early gains following publication of FED's Chair Powel prepared remarks for Sweden's Riksbank symposium on central bank independence, organized by Riksbank.
Remarks showed that Powell will not discuss the state of the US economy or the prognosis for monetary policy, therefore markets attention will turns on Thursday's CPI inflation reading.
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Create account Try a demo Download mobile app Download mobile appBelow are key takeaways from Powell remarks:
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Without congressional laws, it is inappropriate for us to use our monetary or supervisory tools to promote a greener economy.
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The Fed must resist temptation to broaden its scope to address other important social issues.
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The Fed has narrow responsibilities regarding climate-related financial risks.
As for inflation, the market expects a reading of 6.5%, while in November it was 7.1%YoY. Can inflation surprise with a lower reading? Here attention may focus not only on energy prices (in December fuel prices were lower than in December 2021), but also on food, which maintains a significant contribution to inflation (approx. 1.5-1.6 percentage points in recent months) . If the contribution of food inflation drops significantly, then this will be a sign of potential deeper declines in the coming months.
The latest contribution of energy prices is 1.0 pp, while food prices are 1.5 pp. Source: Bloomberg
Food inflation is still over 10% y/y! However, the prices of fertilizers, which affect the prices of agricultural commodities and, of course, food, suggest that food inflation is coming to a halt. Source: Bloomberg
US500 again approaches major resistance at 3900 pts. Source: xStation5The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
