Markets Mildly Shaken Yesterday by Reports Trump Canvassing for Powell Ouster, Recovery After Trump Says Firing 'Highly Unlikely' Without Cause; US PPI Data Positive for Inflation; Major US Equity Indices Approaching Recent Record Highs; Bitcoin Rising Again After Printing New Support Above $118,000
Summary: Speculation that President Trump will soon try to find a way to get rid of Fed Chair Jerome Powell sent stock markets lower for a short while until the President clarified forcing Powell out would be "highly unlikely".
- The main topic in markets today is the controversy regarding whether President Trump, who has made no secret of his strong dislike of Fed Chair Jerome Powell's monetary policy; name, his refusal to hurry up with rate cuts. Yesterday Trump reportedly floated the prospect of firing Powell with Republican Congress members, and when this news became widely known it hit US stocks and the US Dollar. It is not clear how President Trump might remove a constitutionally independent Fed Chair. Trump later said it was "highly unlikely" that he would ever fire Powell for anything other than cause, all but ruling it out, which helped the US stock market to recover. The NASDAQ 100 Index and the S&P 500 Index are both back within sight of their all-time highs which were made earlier this week. The US Dollar has also bounced back and is now advancing strongly.
- Yesterday's release of PPI (purchasing power index) data in the USA - seen as a key inflation metric - was positive for inflation and stocks, showing no month-on-month increase while an increase of 0.2% was widely expected. Although this data is theoretically negative for the US Dollar, the greenback is currently advancing strongly, in line with its medium-term bullish trend.
- In the Forex market, the US Dollar index continues to rise firmly, printing a new higher support level at 97.65. In the wider market, since todays Tokyo open, the Euro is the strongest major currency, while the Australian Dollar is the weakest. The EUR/USD currency pair remains within a valid long-term bullish trend but yesterday traded as low as $1.1562 so any long trade here does not look very healthy right now. The European Union is considering slapping retaliatory tariffs on US imports of aircraft, vehicles, and some other goods.
- The digital asset Bitcoin is rising again after printing new support above $118,000. Trend traders will have been long since at least the end of last week and will probably still be seeing their trades in floating profit. For those finding it difficult to access Bitcoin, there are several affordable Bitcoin ETFs as well as Bitcoin micro futures (10% of a Bitcoin).
- Gold and Silver remain in valid long-term bullish trends, but they are currently printing bearish price action.
- Copper remains bullish. Many trend traders will be long of Copper due to last week's huge rise to a new all-time high following Trump's announcement that all copper imports would be subject to a tariff of 50%.
- The lesser-known precious metal Palladium is showing relatively bullish price action and continues to break to new long-term high prices, attracting the interest of trend traders. Palladium futures are expensive, but there is an affordable physical Palladium ETF.
- Australian Unemployment data showed a surprise rise in the unemployment rate from 4.1% to 4.3%, which may be contributing to the weakness of the Australian Dollar.
- There will be data releases later today in the USA of retail sales and unemployment claims.