Risk sentiment has been hit hard by Powell’s hawkish Jackson Hole speech last Friday, triggering strong flows out of risk and into the US Dollar.
- Fed Chair Powell’s hawkish speech at Jackson Hole last Friday, in which he suggested a sustained period of rate hikes will be needed to drive down high inflation and will cause pain to the economy, has triggered a renewed selloff in stock markets and other risky assets, and given a very strong boost to the US Dollar, with the US Dollar Index and the 2-Year US Treasury Yield both trading at very long-term highs, and the GBP/USD currency pair falling to a new 2-year low. There is a strong long-term bullish trend in the US Dollar that looks likely to continue and Forex traders will probably do well to keep that in mind today.
- Global stock markets are falling almost everywhere. The S&P 500 Index and the NASDAQ 100 Index are trading well below their Friday closes, and the Japanese Nikkei 225 Index is down by more than 2.5%.
- In the Forex market, the US Dollar is the strongest major currency, while the British Pound and the New Zealand Dollar are the weakest.
- Bitcoin is trading below $20k but has yet to break below the crucial support level at $19,164.
- The Chinese Yuan reached a 2-year low earlier today.
- It is a public holiday today in the UK, so trading in the British Pound may be thin before the New York session begins.
- Daily new coronavirus cases globally dropped last week for the sixth consecutive week.
- It is estimated that 67.6% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.7% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.
- Total confirmed new coronavirus cases worldwide stand at over 606 million with an average case fatality rate of 1.07%.
- The rate of new coronavirus infections appears to now be most significantly increasing in Haiti, Japan, South Korea, and Russia.
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