While Wall Street stocks were little changed overnight, Asian stocks traded mixed on Thursday. In his testimony, Powell said that the central bank would not be altering its easy monetary policy for some time. He also noted that that inflation will likely remain elevated, but eventually moderate, reinforcing the central bank’s position that rising inflation is a temporary impact from the recovering economy.
Earlier today, China reported its economy expanded at a 7.9% annual rate in the last quarter, down from 18.3% in January-March. In June, industrial output rose 8.3 percent and retail sales grew 12.1 percent, both edging down from the month before.
European stocks mostly fell on Thursday as investors digested dovish comments from Federal Reserve Chairman Jerome Powell. Elsewhere, the European Central Bank Governing Council member Francois Villeroy warned earlier today that the biggest threat to recovery for companies is labor shortages.
Against this backdrop, the UK FTSE 100 shed 0.58% to 7,050, Italy’s FTSE MIB loses 0.97% to 24,949, France’s CAC 40 declines 0.43% to 6,530, while the German DAX 30 sheds 0.68% to 15,681. U.S. stock index futures were mixed as investors digested dovish comments from Federal Reserve Chairman Jerome Powell.
In currencies, the dollar stays under pressure following a dovish message from Powell. EURUSD managed to get back above 1.1800 but retreated from the 1.1850 intermediate resistance in recent trading. Later in the day, initial jobless claims, the Philly Fed index, the NY Empire State index and US industrial production could affect the pair through dollar dynamics. Also, Powell will once again testify to the Congress.
In other markets, bitcoin managed to erase intraday losses to finish marginally higher on Wednesday. Still, the leading digital currency failed to regain the $33,000 figure and came under renewed selling pressure today. The BTCUSD pair remains range-bound while trading volumes keep falling these days amid lower prices and lower volatility. Bitcoin’s dominance stood at 46.25% on Thursday, slightly off an early low of 46.10%.
Nathan Lambert, Head of Global FX Analytical Department