Dow Jones rises as Fed Chairman Powell testified

US stockmarkets were on the rise yesterday as Fed Chairman Powell yesterday testified before the House of Representatives. The Fed Chairman in his testimony indicated flexibility for the Fed’s rate hike path which may not have been the solid hawkish signal the markets may have been expecting. In his testimony the Fed Chairman also highlighted the uncertainty created from the crisis in Ukraine by stating that “The conflict is causing tremendous hardship for the Ukrainian people. The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely”. In the American session today, we get from the US the ISM non-manufacturing PMI figure for February.

The indicator’s reading is expected to rise and reach 61.0, if compared to January’s 59.9 and if so could support the USD as it would imply that economic activity in the US services sector expanded at a faster pace in February than in January, thus providing some support for the greenback. At the same time, we also get the US factory orders growth rate for January. The rate is expected to get out of the negatives, accelerate and reach 0.7% mom if compared to January’s -0.4% mom. Should the actual rate meet its respective forecast or accelerate even further, we may see the USD getting some support as the rate would imply growth once again for the US manufacturing sector. Before that though we also get from the US the initial jobless claims figure for past week and the indicator’s reading is forecasted to drop, implying that the US employment market continued to tighten in the last full week of February and thus provide some support for the USD.

Please note that the release gains on attention as its the last reading regarding the employment market before the release of the US employment report for February in Friday’s American session. Please note that the ADP figure for February dropped more than expected yesterday. On the monetary front we note during the American session, Federal Reserve Chair Jerome Powell delivers his second testimony before US lawmakers this time the Senate while we also note Canada’s central bank Governor Tiff Macklem Federal Reserve Bank of Richmond President Thomas Barkin while BoC Governor Maclem is to make a second appearance with Senior Deputy Governor Carolyn Rogers, this time at the House of Commons Standing Committee on Finance via videoconference. Today in the European session, we note the release of Turkey’s CPI rates for February and is expected to accelerate.

Should the rate accelerate as forecasted, surpassing 50 % yoy and given the sensitivity of the Turkish economy on the issue, we may see the pressures rising for the Turkish Central Bank to hike rates and tighten its monetary policy. Thus, in such a scenario we may see the TRY getting some traction. Later we note the release of Switzerland’s CPI rates for the same month. The rate is forecast to accelerate and reach 1.8% yoy if compared to last months’ rate of 1.6% yoy. Should the rate accelerate as forecasted or even more we may see the CHF getting some support as it would imply that inflationary pressures are still on the rise in the Swiss economy, turning the screw on the SNB to abandon its ultra-loose monetary policy.

Dow Jones was on the rise yesterday distancing itself from the 33240 (S1) support line yet seems to have calmed down. We tend to maintain a bias for a sideways motion for the index currently given also that the RSI indicator below our 4-hour chart seems to be running just above the reading of 50, implying a rather indecisive market. Should buyers have the upper hand, we may see the index breaking the 34290 (R1) resistance line and aim for the 35160 (R2) level. Should a selling interest be displayed by the market we may see the index breaking the 33240 (S1) support line and aim for the 32250 (S2) level.

USD/TRY seems to have some slight bullish tendencies as it broke the 13.9300 (S1) resistance line now turned to support and seems to be scoring higher highs and higher troughs. We tend to maintain bullish outlook for the pair given also that the RSI indicator below our 4-hour chart is between the readings of 50 and 70 with an upward slope. Should the bulls actually intensify their action we may see the pair aiming if not breaking the 14.6300 (R1) resistance line. Should the bears take over, we may see USD/TRY breaking once again the 13.9300 (S1) support line and aim for the 12.5100 (S2) support level.

US30 Cash H4 Chart