On the first day of the semi-annual congressional hearing on monetary policy, Federal Reserve Chair Jerome Powell reaffirmed that the Fed is in no hurry to cut interest rates and also restated that President Trump has no right to fire him or other Fed policymakers.
When testifying before the Senate Committee on Banking, Housing and Urban Affairs (hereinafter referred to as the Banking Committee) on Tuesday, February 11th, Eastern Time, Powell emphasized in his prepared remarks that the inflation rate in the United States remains high and the economy continues to grow strongly. Under such circumstances, the Fed is patient in adjusting interest rates, reiterating the risks of both lowering rates too quickly and too slowly. He also reaffirmed that when adjusting interest rates in the future, the Fed will assess data, economic prospects and the balance of risks.
During the question-and-answer session of the hearing, a congressman asked whether the neutral interest rate – that is, the rate level which the Fed theoretically believes neither increases the upward pressure on inflation nor restrains inflation – has risen.
Powell replied, “Yes, the neutral rate is now much higher than it was before the pandemic. The neutral rate before the pandemic was ‘very, very low.’ Many of my colleagues on the FOMC also believe that the neutral rate should be higher now.”
Regarding the fact that mortgage rates have not significantly dropped along with the Federal Reserve’s interest rate cuts, Powell said that this is actually not related to the Fed’s policies, but rather depends on the 10-year US Treasury yield. Mortgage rates may remain high, and even if they do decline, in many places, there may still be a shortage of housing supply in the real estate market.
Powell suggested that the 10-year US Treasury yield “might remain high”, but once the Fed cuts interest rates, long-term borrowing costs should also decline, though “I don’t know when that will happen.”
A congressman asked Powell why the Federal Reserve couldn’t control long-term interest rates. He said there were many factors involved, such as inflation expectations and the trajectory of the budget deficit. “We have some influence, but most of the time we don’t.”
Boosted by Powell’s neutral-to-strong remarks and the potential impact of Trump’s possible tariff hikes, the US dollar continued to consolidate above the 108 mark.
In terms of non-US currencies, the pound rebounded significantly due to remarks by Bank of England officials suggesting that a rate cut in March was unlikely. The GBP/USD pair rose from around 1.2350 to above 1.2450, making it the most outstanding non-US currency over the past 24 hours.
Technical analysis:
Gold: Yesterday, our plugin alerted us to buy again when it retracted to the green demand zone. As we can see, after the price pulled back to 2908, it first rebounded to around 2915. At the same time, we also prepared for a rebound operation after the yellow liquidity refresh. Subsequently, the price, as we predicted, did not rise directly but quickly broke through the 2900 mark, stabilizing and rebounding only after reaching around 2880. Today, we will continue to wait for a stabilization signal before going long. The key momentum breakthrough level is around 2900/05. For detailed positions, please consult the plugin.
(15-minute Gold Chart)
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Nasdaq: Yesterday, our plugin alerted that a buy-in should be made after the price broke through 21,830 and then pulled back. However, the pullback was slightly deeper, and the price directly tested the new demand zone of 21,730/21,650 before rebounding. Currently, the price has entered a convergent consolidation pattern. For today, continue to watch for buy-in opportunities after the price breaks through and pulls back. For detailed positions, please consult the plugin.
(15-minute Nasdaq Index chart)
If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg.
GBP/USD: Yesterday, our buy entry in the blue zone of GBP/USD was very successful. After the price broke through 1.2369, it rose all the way to 1.2459, gaining a space of 90 pips, with a profit-to-risk ratio of around 4.5 times. As the pound had an independent movement overnight, today we will continue to pay attention to the support at the demand zone for a pullback and look for new buy opportunities after confirmation. For detailed positions, please consult the plugin.
(GBP/USD 15-minute chart)
If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg.
Today’s key financial data and events to focus on:
21:30 US January Unadjusted Core/Non-core Consumer Price Index (Year-on-Year)
At 23:00, Federal Reserve Chair Powell will deliver his semi-annual monetary policy testimony before the House Financial Services Committee.
At 23:00, the Monetary Policy Committee member of the Bank of England, Green, will deliver a speech.
