Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium didn’t disappoint. He did what the markets expected, affirming the openness for beginning tapering this year, without indicating the need for an imminent start. Just as Philadelphia Fed President Patrick Harker described, Powell laid out where the center of the FOMC is in terms of policy. US stocks cheered the speech with S&P 500 and NASDAQ closing at record highs.
In the currency markets, Dollar was sold off notably after Powell and end the week as the second worst performer. Yen was the weakest following rebound in major global yields, while Swiss Franc was third. On the other hand, commodity currencies closed as the strongest ones, led by New Zealand Dollar.
Development in Gold suggests that more downside in now in favor in the greenback. We’d like to see break of 1.1804 resistance in EUR/USD and 1.3785 resistance in GBP/USD very soon to affirm this case. Meanwhile, Aussie has the potential to outperform ahead, given that vaccination is speed up and investors are starting to look through the current lockdowns.
NASDAQ and S&P closed at new record highs, more upside ahead
After some initial hesitation, NASDAQ surged on Friday to close at new record high at 15129.50 last week. Most importantly, it managed to close well above 15000 handle, as well as 61.8% projection of 10822.57 to 14175.11 from 13002.53 at 15074.39. Daily MACD is trending up, suggesting there might be some upside acceleration ahead.
In any case, near term outlook will stay bullish as long as last week’s low as 14776.98 holds. We might see NASDAQ picking up momentum further and target 100% projection at 16355.07 next.
S&P 500 also closed at 4509.37 record high, and above 4500 handle. Near term outlook will also stay bullish as long as last week’s low at 4450.29 holds. It’s on track to next target at 100% projection of 2191.86 to 3588.11 from 3233.94 at 4630.19.
10-year yield failed 55 day EMA again, to extend sideway trading
10-year yield tried to rally last week but again failed to sustain above 55 day EMA. Near term outlook is mixed for the moment. 50 % retracement of 0.504 to 1.765 at 1.134 should provide a solid floor in case of another decline, unless we have something drastic happening. However, TNX will still need to sustain above 55 day EMA, and break through 1.142 resistance decisively, to confirm completion of correction of 1.765. Otherwise, more sideway trading is likely, suggesting some relative indecisiveness among investors.