Trump vs Powell?

Daily Analysis - 20/06/2019

Risk is huge if Trump removes Powell


According to a former U.S central bank director If the President of the United States Donald Trump tries to remove Jerome Powell as the head of the Federal Reserve then the risks are going to be huge and will probably damage investor's viewpoint regarding the stability of the US market.

Investors have already been in worry mode in recent months and they became increasingly sensitive because of the trade pressures between the U.S. and China. On Thursday Robert Heller in an interview with CNBC said “To fire a Federal Reserve governor or chairman would be a very unprecedented move, it would result in turmoil in the financial markets, it would be something that you really don’t want to do because you don’t need an absolute increase in uncertainty which this would bring about”. Robert Heller was an active part of the Fed’s Board of Governors from 1986 to 1989.

Oil prices grow and OPEC set a meeting date

On Thursday Oil increased more than 1% while official numbers revealed that the U.S. crude stocks dropped more than anticipated. The drop happened while oil producers and OPEC finally set a meeting date to consider production cuts. OPEC members finally agreed to meet on July 1, accompanied by a meeting with non-OPEC allies one day later on July 2 after weeks of waiting for the final dates. The U.S. WTI crude futures moved up 79 cents to $54.55 a barrel.

Brent crude futures grow 82 cents to $62.64 then dropped on Wednesday by 0.5%.


Gold loves Fed rate cut hints

On Thursday the Safe-haven Gold surged to its largest level in half of a decade following the U.S. Federal Reserve that indicated potential interest rate reductions in the near future. The Fed kept interest rates even, as required, however, announced that “will act as appropriate to sustain” the country’s economic expansion as it approaches the 10-year mark and dropped a promise to be “patient” in adjusting rates. The U.S. gold futures rose 3% to $1,397.69 an ounce while Spot gold went up 1.3% at $1,377.40 per ounce.


Dollar in defensive mode

On Thursday the popular greenback was on defensive mode following the Federal Reserve indications that they ready to reduce the interest rates to fight global and internal risks.

On Wednesday the Fed kept interest rates stable as expected but said the changes for lowering rates are increasing. The dollar index versus a case of six important currencies wasn't changed much it was at 97.187 after dropping more than 0.5%.


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