Today Fed Chair Powell Speech May Move Markets

Today, Fed Chair Powell's Speech May Move Markets 

Federal Reserve Chair Jerome Powell speaks today at 17:55 GMT, such a speech may give clues on intentions of the Federal Reserve on the interest rates for the future ahead of the next FOMC meeting. A greater chance of the rate hikes communicated by Powell will make one foretell the appreciation of USD due to the fact that it usually attracts foreign capital inflow. Conversely, if he were to say that there's a zero percent chance of rates moving higher, or if he introduces other worries about a slowdown in the economy, then the USD may attract selling pressure.

Market analysts would expect Powell to talk about inflationary pressures and what the Fed thinks it can do about them. In his speech, if he emphasizes that the need to hold down inflation is through tight monetary policy, then the prospect for a rate increase would rise. This could feed into a short-term rally in the dollar and higher currency markets volatility. However, with Powell now raising concerns over a potential slowdown or global risks, the market is likely to take this as a more dovish stance and continue the selloff in the dollar's value.

While Powell's speech may not enumerate any specific policy actions it could mean market expectations in the weeks before the FOMC meets next. So investors and traders will continue being cautious, and slight changes in rhetoric are enough to change the market quite dramatically.

Given Powell's influential position, this event can have a huge impact on the broader financial markets and even the USD, but how much will depend entirely on the market participants' perception of his statement. Therefore, the event will be decisive in either changing the course of actions or reinforcing the current course that the U.S. monetary policy has adopted to leave open possibilities for multiple market events in the coming days.