USD Drops, S&P 500 Hits Record on Dovish Fed Minutes, Powell Testimony

XAUUSD daily chart July 9

XAUUSD daily chart July 9

"Of course, I would not do that", replied Powell, who was appointed by Trump. "Pack up. It's time to go"?" he was asked.

"The central banker said the economy was in good shape even though "crosscurrents have re-emerged". -China trade war was posing a serious risk of ending the economic expansion by pushing growth and inflation lower.

The president has repeatedly accused Powell and the Fed of keeping credit too tight for too long and of thereby holding back the economy and the stock market.

U.S. Federal Reserve Chairman Jerome Powell is suggesting short-term interest rates could soon be cut as the global economy weakens and concerns persist over trade policy. "On balance, investors live by the credo: 'Don't fight the Fed, ' and if rates are being cut - whatever the reason - they have often stood by stocks, so I'm not surprised we're making new highs", said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

Although the US Government reported strong jobs growth in June, other major economies' "data have continued to disappoint. across Europe and around Asia, and that continues to weigh", Mr Powell said. "These concerns may have contributed to the drop in business confidence".

Powell said while the US labor market remains strong and consumer spending has been stable, the business investment growth rate has "slowed notably". But the economy is likely slowing. "But Wednesday's message was clear, the data is softening - particularly on the inflation side - and downside risks are significant", Erlam said.

Powell is set to testify before the Senate Banking Committee on Thursday.

THE QUOTE: "With the markets at 27,000 on the Dow and 3,000 on the S&P, they're baking in that a deal gets done with China, that the Fed cuts rates and remains dovish and then earnings and guidance come in better than expected", said Sean Lynch, managing director of equities at Wells Fargo Private Bank.

Trump handpicked Powell more than a year ago, but has not shied away from criticizing the central bank head. "He's not doing that".

"I can't hear you", said Waters in response to which the hearing room erupted in laughter.

The Fed chief stressed that the law guarantees him a four-year term, . and he fully intends to serve it out.

While the US Dollar has firmed over the past week, the Pound Sterling to US Dollar (GBP/USD) exchange rate has recovered this week's losses as the US Dollar's (USD) recent gains were seen as overdone in the face of a more dovish Federal Reserve. "Our most hard problem is not our competitors, it is the Federal Reserve!"

Investors, as tracked by the CME Group, have assigned a 100% likelihood to a rate cut when the Fed meets in three weeks. Economists expect the reduction will likely be a quarter-point.

"We can make an argument for the current level of the S&P 500 based on the fundamentals of a high level of employment, low inflation, an accommodative Fed, and hopefully finding an exit ramp on the U.S".

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