Fed Chair Powell went before the Senate banking committee today in the 1st of 2 days of testimony on Capitol Hill. Tomorrow the Fed will be in the House of Representatives.

The prepared text was similar to the comments from the last FOMC decision last week along with his press conference . Later he started talking about demand destruction which helped give the stocks a boost as investors and traders started to think in terms of perhaps slower growth leading to a somewhat less terminal rate.

US yields moved lower with the 2 year yield moving to an intraday low of 3.037% (it is currently trading at 3.062%). The 10 year yield moved down to a low of 3.124% (currently at 3.158%).

Recall that the 10 year yield traded as high as 3.497% just last week, while the 2 year yield reached a peak of 3.454%.

So there has been a somewhat significant move lower of about 40 basis point over the last week or so. Will the Fed only tighten by 50 basis points instead of 75 basis points at the next meeting?

The USD moved lower in response.

However, later in the testimony, Powell when asked if 100 basis point rise was off the table, more or less responded that "anything is possible". Indeed it is, especially given the uncertainty from the risks including Ukraine war, China Covid policy, where inflation would end up, etc.

The market didn't like that response as well as others, and stocks started to move lower, yields came off highs and the dollar moved back higher.

forex
The strongest to weakest of the major currencies

At the end of the day, the CHF is ending the day as the strongest of the majors (SNBs Jordan said that inflation data showed the need to tighten but was unclear as to when).

The NZD is ending as the weakest.

The USD was mixed with gains vs the CAD, AUD and NZD and declines vs the EUR, JPY and CHF.

In other markets:

  • Spot gold is trading up $4.67 or 0.25% at $1837.68
  • Spot silver is down $0.24 or -1.13% at $21.41
  • WTI crude oil is trading at $104.32. That's down $4.98 on the day
  • Bitcoin is back just below the $20,000 level at $19992. The low price extended to $9743.99.

The US stock market, the major indices closed down modestly:

  • Dow industrial average -47.12 points or -0.15% at 30483.14
  • S&P index -4.9 points at -0.13% at 3759.90
  • NASDAQ index -16.21 points or -0.15% at 11053.09

US yields close sharply lower with the shorter end moving the most:

  • 2 year yield 3.062%, -13.9 basis points
  • 5 year 3.235%, -13.0 basis points
  • 10 year 3.164%, -11.7 basis points
  • 30 year 3.254%, -8.6 basis points.

Technically, speaking:

  • EURUSD: The EURUSD to the highest level since June 10, surpassing the high price from last Thursday's trade at 1.0572. The high price tested a swing area at 1.06072 and found willing sellers. The price is closing back below the 50% of the last move down from the May 30 high. That level comes in at 1.0572. The current price is trading at 1.0568 just below that level. Into the new trading day traders watch the 1.0545 level for support. If it holds, a rotation back toward the 50% and above would be eyed.
  • USDJPY: The USDJPY came off the highest level since 1998 today (high at 136.70). However, the low was able to stay above the old swing high for the year from June 14 at 135.579. Stay above that level in the new trading day keeps the buyers in firm control
  • GBPUSD. The GBPUSD traded lower and then back higher, but could not extend for long above its 50% midpoint of the move down from the May 27 high him. That level comes in at 1.22995. The subsequent moved lower has pushed the pair back toward its 100 hour moving average at 1.22628. The current price is trading at 1.22625 into the close. The 100 hour moving average will be a barometer for buyers and sellers in the new trading day.