Which Assets Await Fed Chair Powell’s Speech On Tuesday

Investors and traders will be all ears as Fed Chair Jerome Powell delivers his speech on Tuesday. Bond yields continued to surge on Monday as traders assess the possibility that the Fed will postpone any talk about rate cuts until later in the year after Friday’s very strong jobs report.

Markets were caught by surprise by Friday’s data showing a 517,000 surge in nonfarm payrolls, as well as a decline in the unemployment rate to 3.4%. There also was data from the services sector, as a poll of purchasing managers for January leapt higher as well.

As for US stocks, investors will be so watchful on Tuesday for Powell’s remarks before the Economic Club of Washington. Powell’s comments on disinflation, post the FOMC meeting, caused investors to bid shares higher last week and overlook another rate hike out of the central bank. But this is not the case after the NFP reading.

Bitcoin dipped below $23K earlier in the weekend and flattened on Sunday as investors await the next remarks by Jerome Powell. If cryptocurrency continues to rebound, venture capital in blockchain projects cols also rise.

Meanwhile, the US Dollar Index was opening the Asia trading week at 103.12, staying in what many analysts call a “defensive” position. The measure of the world’s largest fiat asset spent most of last year surging, hitting stock and crypto prices hard. Year-to-date it’s down 1.4%.

In light of the previous week’s inability to fully break up the market’s optimistic rate outlook, the Fed members will likely continue, this week, to remind the market that the Fed rate will climb above 5% and will be kept there throughout the year.

Concerns over the Reserve Bank of Australia’s next move could entertain AUD/USD traders ahead of Tuesday’s speech by Powel. Following that, Friday’s US UoM Consumer Sentiment Index for February, as well as the University of Michigan’s 5-year Consumer Inflation expectations, will be important for the pair traders to watch.

It should be noted that the market concerns favor a hawkish move from the RBA amid upbeat inflation data but a less than 0.25% rate hike could quickly drag the AUD/USD pair.