Powell's Speech And Key Data in Focus

Market volatility levels continue to remain high but are still forming clear trend waves. The US Dollar and US Stocks pulled back this morning, but both climbed to a new weekly high (US Dollar) and weekly low (US Stocks). In general, the market proceeded as expected, with no major shocks. The only major economic release over the past 24 hours was the US Consumer Confidence which came in slightly lower, which was expected.

Markets are also extremely interested in the crude oil, which significantly declined over the past three weeks but is trading slightly higher this week. Currently, the price is moving within a price range between $77.92 and $79.62. Markets are starting to turn their attention to Sunday’s OPEC meeting rather than solely focusing on demand from China as in the previous weeks. Investors are mainly looking to see if OPEC will again decrease production targets and their view on demand during the first quarter of 2023.

The price of Bitcoin increased by over 3% during this morning’s Asian Session and reached $17,000 for the first time since Nov. 15. However, traders are cautious that the price is now at a significant psychological price, and a resistance level.

All assets continue to be influenced by the global monetary policy, with most banks expected to take a slightly softer stance during December. This is with the exception of the Central Bank of Turkey, which is one of the only regulators decreasing interest rates. Last week the CBT lowered its main rate from 10.5% to 9.0%, even though the current inflation level is above 80%. According to most economists, hyperinflation will force the economy into a recession with low demand.

USD/TRY price chart.

So far, the Turkish Lira lost almost 40% against the US Dollar this year. Most economists believe the Lira will lose at least another 13% during 2023. However, traders should be cautious about volatility and the nature of exotic currency pairs.

Dow Jones

The Dow Jones traded lower but still saw healthy buying. The price has again fallen to the previous price range between $33,389 and $33,977. The instrument has spent most of the past 2-3 weeks within the range indicating the market’s valuation. The price movement has formed a clear downward trend with lower lows and lower highs. However, traders will be eager to see how the market reacts now the price is back within the previous range.

Dow Jones price chart.

The index over the past week has largely been pressured by Walt Disney Company (NYSE:DIS), Apple (NASDAQ:AAPL), and Home Depot (NYSE:HD) Stocks. Disney stocks continue to be pressured by the latest earnings reports and a lower-than-expected dividend payment, which will not please investors. Apple has mainly been under pressure from their China connections and uncertainty regarding workers, lockdowns, and supply chain.

Walmart (NYSE:WMT), on the other hand, is expected to show signs of strong growth prospects. The company’s sales reached $25.3 billion, which has increased by 7.1% compared to the previous quarter. Additionally, operating income rose 3.9% to $6 billion. Investors also expect the company’s sales and profits to continue increasing due to the Christmas period and sales such as Black Friday.

Lastly, investors will focus on speech by Fed Chairman Jerome Powell this evening. It is expected that Mr. Powell will confirm interest rates targets will remain the same, but the regulator may lower the pace. The stock market is also likely influenced by today’s GDP figure and JOLTs job openings.