Hawkish Powell slams Stocks, Gold and Oil, USD takes off

Jerome Powell, testifying in front of Congress early in the US session, dashed the bulls hopes of a Fed pivot anytime soon after hinting that larger than expected hikes are a possibility and rates could stay higher and longer than the market was pricing in.

This saw an instant reaction in risk assets as the markets priced in a terminal Fed rate of 5.65% (an extra 105bps from where we are now). Stocks were slammed with the Dow finishing down 575 points, closing well below its 100 day MA

Other risk assets performed just as poorly with Gold having its worst day since early February with Perth Mint headlines (Selling diluted gold to China), a strong USD and surging bond yields seeing the precious metal looking to test the 2023 lows.

Crude oil also got hammered as a hawkish Powell stoked growth concerns seeing WTI crashing almost 4%, back to the $77 handle, its biggest fall in over 2 months.

In FX, the USD was king , with surging US yields and as a flight to safety saw the greenback outperform, the AUDUSD had the double whammy of a dovish RBA followed by a hawkish Powell, seeing it be the worst performing currency of the day.

Coming up in todays economic announcements, more Central bank action as Jerome Powell continues his testimony for day 2, also the Bank of Canada rate decision where the BOC is expected to hold rates for the first time since starting their tightening cycle.