Markets experienced some measure of volatility over the past few sessions but ultimately stayed range-bound ahead of Non-Farm Payrolls later today. Jerome Powell’s comments earlier in the week reassured traders that an interest rate hike remained very unlikely, but some of his other comments continued to downplay the prospect of rate cuts any time soon. In no uncertain terms, the Federal Reserve Chair stated that inflation is still too high and that "further progress in bringing it down is not assured and the path forward is uncertain". Essentially, rate cuts are delayed, not cancelled.
The Dollar Currency Index showed some signs of weakness over the past two days but remains firmly above the 105 level for the time being. One contributor to the downwards pressure on the DXY is the sudden strength observed in the Japanese Yen. USDJPY fell a solid 2% on Wednesday, followed by a further 0.67% over the next session. A quick glance at the chart suggests the Bank of Japan may have finally stepped in to defend its currency against any runaway price action, although markets will have to wait for any official confirmation.
Appetite for further confrontation in the Middle-East continued to dissipate this week and with it any fundamental support for crude oil prices. Brent Crude fell below $84 a barrel on Wednesday, WTI now hovering around $78. Gold seems to have lost momentum one way or another for now, content to consolidate around $2,300 an ounce.
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