A1 Trading Company

Ticker tape by TradingView

November 4, 2021

Powell Speech: Fed Begins Tapering But It's Transitory

Bart Kurek

Yesterday we had the FOMC Press Conference presented by Fed Chairman Powell. It's among the primary methods the Fed uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the recent interest rate and other policy decisions, along with commentary on economic conditions such as the future growth outlook.

The Federal Open Market Committee made the decision to keep interest rates unchanged as expected, and finally announced the beginning of the reduction in asset purchases by $15B/month. The Fed will begin tapering later this month with a reduction in Treasuries purchases by $10B, and mortgage-backed securities by $5B.

Also, policymakers still think inflation will be "transitory" although Powell noted that supply chain issues will likely extend into next year, meaning inflation will also remain high. He also said he would not want to surprise markets by changing the taper strategy, opposite to the statement that noted they can adjust the strategy as needed.

Let's look at some key quotes from his policy outlook:

  • "By many measures, we are in a very tight labour market"
  • "The issue is, how persistent is the labor market tightness, given it's due to Covid"
  • "It is clear we are set to go up to a higher employment level"
  • "We need to be ready to act if we have to"
  • "It is appropriate to be patient on jobs and inflation"
  • "Transition away from goods could bring inflation down"
  • "We want to see the process unfold to gauge true state of the economy"
  • "We think time will tell us more"
  • "Now is not the time to raise rates"
  • "If we need to raise rates, we'll be patient but not hesitate"

XAU/USD Analysis:

Price has begun to form a bearish flag pattern prior to the FOMC meeting. We saw a bearish rally from September onwards, followed by a retracement period where price formed an ascending channel and last week we saw a break of this channel. Price quickly retested the channel's bottom, and yesterday before the Fed's Funds Rate and Press Conference, we saw price rally downwards and head to new recent lows at 1760. Usually, with a strong rally in either direction, price usually fills the gap and so far we can see price retracing its move and staying around 1778.

Further macroeconomic data to look out for is the NFP report on Friday the 5th of November. Following the terrible September headline number of 194K, the country is expected to have added 455k new job positions, dropping the unemployment rate by 0.1% to 4.7%. This should strengthen the dollar and a continued bearish move on Gold is likely, potentially completing the bearish flag pattern towards 1725. Ofcourse, look out for the results and make your own judgement before blindly entering the market.

A1 Edgefinder

#1 Market Scanner Tool
Take 10% off using code "READER"
GET ACCESS NOW
Want to See Our Trades?

Join The VIP Community!

Our entries, exits & analysis
Live Webinar Coaching
Trading Chatrooms
Strategy Library 
Exclusive Trading Guides
Use Code "READER" for 10% OFF!
JOIN NOWJoin FREE Discord
Listen to More Episodes
Why the New FOMC Decision Matters

Yesterday, the Federal Open Market Committee (FOMC), the Federal Reserve’s policy-making body, implemented yet another 75 basis point interest rate hike. While this move was perfectly in line with market forecasts, Chair Powell’s comments following the subsequent press conference, in which he discussed the FOMC’s new set of economic projections, were significant. He continued to […]

Read More
Shocking CAD Inflation News

Statistics Canada released a surprising new batch of inflation data this morning: month-over-month CPI failed to meet market forecasts, declining by 0.3% instead of the anticipated 0.1%. Rather than being an outlier, the other measurements of CPI mostly followed suit, as both year-over-year Trimmed CPI and Median CPI likewise failed to meet expectations. Trimmed CPI’s […]

Read More
2 Paths for Aussie Bears

At 9:30 pm Eastern Time tonight, the Reserve Bank of Australia (RBA) will be publishing their latest round of monetary policy meeting minutes. While there is a chance that their intentions could come across as more hawkish than expected, they currently have little reason to be. Despite relatively low unemployment at 3.5%, steady GDP growth, […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
Home
Edgefinder
VIP
Menu
homesmartphonelaptopmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram