Wall Street rebounded on Friday after a strong payrolls report and remarks from Federal Reserve Chairman Jerome Powell that suggested the central bank would be flexible with monetary policy. Powell responded with a terse "No" when asked if he would resign if Trump requested him to do so. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
Mester, reiterating comments by Fed Chairman Jerome Powell earlier in the day, said she was also paying careful attention to recent volatility in financial markets, both for the information that may convey about economic risks, and for the risks volatility itself could produce if it starts to undermine economic confidence. More importantly for Treasury investors, wages jumped 3.2 percent from a year ago, gaining 11 cents between November and December, an increase of 0.4 percent.
Appearing on a panel with his two predecessors - Yellen and Ben Bernanke - Powell also said that the Fed could alter its approach to trimming its huge balance sheet if it determines such a change is needed.
"I thought stock market concerns about growth were overblown", said Gus Faucher, chief economist at PNC.
The main catalysts for the surge were the monthly USA payrolls report, which blew past economists' forecasts with the largest number of jobs created in 10 months, and comments by the Fed's Powell.
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Analysing the Fed statements, James Glassman, senior economist at JP Morgan said, "We have got very strong job news, the economy got lot of momentum to generate this kind of job news then why has the US Fed become cautious - it is because the inflation trends have been little more moderate". The market bounce came after a volatile December selloff in which traders grew increasingly sceptical of the Fed's upbeat forecasts and plans to keep hiking interest rates in 2019. This response no doubt helped the market to recover on Friday. Strong resistance can be seen at 108.45 (50% retracement level), an upside break can trigger rise towards 109.94 (Oct 3rd high).On the downside, immediate support is seen at 108.00 (Psychological level), a break below could take the pair towards 107.44 (23.6% retracement).
On the economic front, stronger-than-expected employment data helped regain steam for the U.S. economy.
Volume on USA exchanges was 8.68 billion shares, compared to the 9.14 billion average over the last 20 trading days.
Dallas Fed President Robert Kaplan said on Thursday that planned rate hikes should be halted for now, while on Friday Mester said she sees only one or two rate hikes this year. Yet signs are growing that Trump's tit-for-tat trade war with China is taking a toll: this week, tech giant Apple and grains trader Cargill warned about weaker sales in China. "However, we look for the Fed to wait until May 1 to hike rates again". This also may have had a positive effects on markets. Articles appear on euronews.com for a limited time.