Markets reacted to yesterday's speech by Fed Chair Jerome Powell - 8.2.2023

On Tuesday, the US dollar index slightly corrected down after a good 3-day growth. The speech of Federal Reserve Chair Jerome Powell at the Economic Club of Washington had a negative impact. He hinted at the possibility of a more restrained rate hike. Powell recalled that his department's goal is to bring inflation down to 2% y/y, compared to 6.5% y/y in December. There was no significant economic news in the US yesterday. On Tuesday, the Reserve Bank of Australia, as expected, raised the rate to 3.35% from 3.1%. This contributed to the growth of the Australian dollar. Japan Goods Trade Balance and Japan Current Account came out this morning. They turned out worse than expected. This may slightly weaken the yen. However, now she is supported by rumors that after the end of the term of Haruhiko Kuroda, Masayoshi Amamiya, who supports a moderate monetary policy, may become the new Deputy Governor of the Bank of Japan. The Japan Ministry of Finance announced that it spent $48 billion to support the yen in October 2022.

Bitcoin quotes have been in a narrow range around the psychological $23,000 mark for the 3rd week. Investors are awaiting the results of the United States Securities and Exchange Commission's review of the peculiarities of the operation of the US cryptocurrency market. Here, this week discusses the regulation of individual retirement account (IRA). Other aspects of the crypto industry will be discussed further. The United States Environmental Protection Agency is considering the impact of cryptocurrency mining on the environment. Players also follow the creation of digital currencies by world central banks. In particular, the Bank of England and the UK Treasury announced the imminent creation of a digital pound.

Yesterday, US stock indices rose. Investors reacted positively to the opinion of Federal Reserve Chair Jerome Powell that inflation will fall significantly in 2023. Shares of Microsoft Corp rose 4.2% on the announcement of the integration of ChatGPT into its software products. Quotes Alphabet Inc added 4.6%. She announced the integration of her chatbot Bard artificial intelligence program into Google. DuPont shares soared 7.5% on strong quarterly earnings. Oil companies Valero Energy Corporation, Marathon Petroleum and Occidental Petroleum Corporation rose about 5% against the backdrop of rising oil prices. Today, the US will release quarterly reports from Walt Disney, CVS Health, Uber Technologies, CME Group and other companies. In addition, Wholesale Inventories' economic data for December will be published.

On Tuesday, oil quotes rose for the 2nd day in a row. The independent American Petroleum Institute reported a reduction in US oil inventories for the week by 2.18 million barrels. This happened for the first time after 5 weeks of their growth. A strong earthquake in Turkey also contributed to the rise in oil prices. Investors are concerned that it could damage oil pipelines from Iraq and Azerbaijan and disrupt the operation of the Turkish oil export terminal Ceyhan.

Natural gas in Europe on the ICE Dutch TTF has been trading in the range of $600-800 per 1000 cubic meters for the 7th week already. Now it is near its lower limit. U.S. gas prices on the Henry Hub fell last Friday to a 3-year low of $2.35 mmBtu. They have now retraced back to $2.65 mmBtu as the weather is expected to cool in the US.

A strong increase in prices for orange juice can be noted due to the risks of crop reduction. For 7 trading sessions, it has risen in price by 20%.