The Fed released its semi-annual monetary policy report last Friday evening, which clearly affected the markets after its release.
The report was very long and very detailed as well, as the file of the report published by the Fed contained 71 pages.
It took some time for the markets to see the details of this report, which made the reaction a little late to the moment it was released.
Here are the most important points made in this report:
The Fed remains firmly committed to bringing inflation back to 2%.
Commercial credit quality remains strong, but some indicators of future business default appear rather high.
Core foreign inflation remains high, and inflationary pressures are widespread.
Expectations indicate that high inflation has not taken hold.
– Price increases will be necessary in the future.
The points mentioned above seem balanced, and it is very difficult to judge them, but it seems that the markets had another opinion about the many points and details mentioned in the report, which led to a clear weakness with the end of trading on Friday, and gave positivity to the markets starting from gold, all the way to indices. .
The question here is: Did the markets evaluate the matter correctly? Was the interaction basically in the right direction?
Allow me, dear reader, to start with the answer to the second question, and then come back to answer the first question.
Markets always accustom us to two types of reaction… a real reaction in the right direction and the continuation of the general tendency for this reaction.
The other type is an imaginary or unreal reaction, where the markets tend to reverse the data or events in order to create as much chaos as possible, and to find suitable disposal or collection centers for major banks and market makers, so that they can evade and mislead the markets, and make as much noise as possible. And mental distraction.. And then you can pounce again on the right direction after this dribbling.
Now, in order to be able to decide what kind of reaction we are currently facing, we must answer the first question, “Have the markets evaluated the matter correctly?”.
In fact…the report is very detailed, and contains many points and axes, whether including inflation, the labor market,…etc., which is normal since this report is issued semi-annually by the Federal Reserve to explain the current monetary policy and its vision for this policy and its effects.
Personally, I will not go into the details of reading the data and data received for one reason that can be said to be easy and abstaining.
If the report was really that simple and the markets were able to evaluate it as they did at the end of trading on Friday!!
So why would he represent the professor? [كما أفضل أن أسميه شخصيا] Jerome Powell before the Senate Banking Committees on Tuesday and then on Wednesday in the House of Representatives [الكونغرس]؟؟
This simply means that the report needs a lot of explanation, clarification, and questions… Jerome Powell must answer the questions and inquiries of the members of the banking committees… Then the markets will re-evaluate and interact again.
So… the bottom line is that the market’s reaction that we witnessed is an initial reaction that cannot be built upon at all, and all the clues of the game and the key password are in the hands of “Jerome Powell”.
And after Jerome Powell’s testimony for two consecutive days Tuesday and then Wednesday, we should not forget that the markets are waiting for the US labor market data on Friday as well… so this week looks very long and very volatile at least from the fundamental analysis side.
And silver .. technical analysis:
The above graph shows the percentage of price performance during the month of February.
Prices reached +1.63% at the beginning of February before retreating to -6.40% at the end of February.
This means that prices fell by 8.03% during the month of February only.
The current price correction reached -3.72%.
In other words, prices rose from the bottom of February to the peak of last Friday by 2.68%.
By a very simple calculation, we find that prices have now corrected by approximately 33.37%, which is nearly a third of the decline that we witnessed in February.
– Obviously, he was more balanced and calm than .
Silver prices fell from its peak of +3.87% to its bottom of -13.83%.
This means that the decline rate reached 17.70%.
– While the current rebound, prices recovered by only 3.52%.
– That is, the current correction rate is only 19.89%, or approximately 20%, which means only 1/5.
And again, this leads us to an important question whose answer cannot be decided with certainty, or if the expression is right, it cannot be said whether your answer is correct or wrong even if it differs from the answer of others.
Who drives the other? Gold leads silver? Or does silver lead gold?
For me personally, I still believe that silver reacts faster and responds faster than gold prices… To confirm once again, the answer that gold is the leader cannot be said to be a wrong answer… because it is a technical point of view in the end where there is no right and wrong.
If you share my opinion, then this means that silver’s limited reaction may be a sign that what happened in the markets on Friday is a state of chaos by the major banks and market makers, and that the general downward path has not changed.
But if you think that gold is in the driving position, then this means that prices also did not change their general downward path, but it can be said that they approached additional steps towards important price levels, if they exceeded them, they may change the rules of the game again.
The bottom line:
– The weekly analysis of gold, and the main price levels, can be found in detail, dear reader, in the attached video below… You can also go to the rest of the weekly analyzes, which are detailed in separate video clips, which include the most important commodities, currencies, and indices as well.
– What we witnessed on Friday is a preemptive step by the markets for what is to come, and it cannot be built upon.
Jerome Powell’s testimony is very, very important on both days, whether Tuesday or Wednesday.
– It is possible to say that a slight partial advantage may be given to his testimony on Tuesday, which comes before the Banking Committee in the Senate, which is considered higher in his authority than the House of Representatives.
– His testimony also remains very important before the House of Representatives, because we usually witness different questions as well, and new points that are raised and discussed.
– Sometimes the main text that Jerome Powell will read is published before the start of his testimony session, so attention must be paid to movements that may precede the news.
– The report contains many, many details, and therefore its testimony will include many, many important statements and interpretations that are expected to move the markets directly.
– This testimony is perhaps the most difficult for a federal president, as it coincides with the largest monetary tightening and raising interest rates since 1994 until now… Therefore, it is expected that the questions will be very important.
The Republicans, in particular, are trying to settle many outstanding scores with the Democrats, and therefore their questions may be more focused and detailed about the direct effects on the economy, and here comes the role of Jerome Powell and his answer to these points.
– It is expected that we will also witness clear talk about the upcoming or continuous interest rate hike, and the method of linking it with the expected data, whether the upcoming inflation data, or even the labor market and jobs data.
We will follow up with you on price fluctuations in upcoming articles, and for more rapid and continuous updates, you can follow
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Reminder in the margins of the article:
. Trading markets always fluctuate in their directions, and depend on a lot of data and news, in addition to major banks and market makers who often direct the market, even contrary to reality and logic sometimes.
. The opinions and ideas above are the summary of the analysis, and they are not direct recommendations, but rather advice for followers, bearing in mind that no one is able to profit continuously from trading operations, even large investors.
. Therefore, we always strive to reduce losses and increase profits in accordance with the analysis and point of view of the method of trading prices, by applying many combined and intersecting analysis methods to try to reach the best results.
. We have diligence, and God is the Grantor of success.
