Jerome Powell's New Inflation Target, Gold's Reaction & Aussie Dollar Closes Up

Trading around a major Fed meeting like the Jackson Hole Symposium (virtual event) is traditionally quite challenging.

With so much build-up leading up to Jerome Powell's speech, many traders and investors are seeking confirmation before making any critical trading decisions.

So it is not surprising to see little change at the top of the Trading Cup leaderboard this Friday.

Wei Wei Wang still holds a commanding lead, hovering above the 100% mark.

Haidong Liu remains firm at 46%, looking to identify trading opportunities that meet the criteria of his trading system, which have been limited over the last week. Please note that trading leveraged products is risky, and you can lose more than what you start with.

Here is a look at today's leaderboard snapshot.

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Gold fluctuates wildly as Jerome Powell takes centre stage

Gold has been consolidating in a narrow $58 range for the past week, unable to gain traction higher or lower.

But you can see there have been some 'fake' moves both higher and lower, testing the patience of breakout and swing traders alike.

You wonder how many traders got set long after the initial break as Powell spoke, only to see a swift retracement back down to the intraday lows.

The 30-minute chart captures the move perfectly.

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Fed's inflation target grabbing headlines

As noted by Kitco, Gold was unable to hold onto the intraday breakout level as Powell noted the US Central Bank will target average inflation, letting it creep higher.

In addition to the revised inflation policy, emphasis will be placed on a broad and inclusive employment target.

Powell commented, "In conducting monetary policy, we will remain highly focused on fostering as strong a labor market as possible for the benefit of all Americans. And we will steadfastly seek to achieve a 2 percent inflation rate over time."

But the policy around inflation was met with differing views and plenty of question.

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Even Tyler Winklevoss chimed in, suggesting under the Fed's new inflation guidelines, Bitcoin could be benefiting.

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This was Winklevoss' thoughts leading up to his speech. But we can confirm that the overnight move on Bitcoin, saw the Crypto test the $11,116 level.

US Dollar still unable to gain traction higher or lower

Leading up to the Jackson Hole Symposium virtual event, we can see how much uncertainty has been playing out across the US dollar index.

Since the most recent sell-off, we've seen plenty of uncertainty, with traders happy to wait for a confirmed break either higher or lower.

From a technical point of view, we can see the longer-term moving average is now heading lower, with the Dollar index hitting consistent lower lows and lower highs.

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Mary McNamara of Trade Charting sums up the overnight action nicely in her tweet this morning.

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In Mary's blog post earlier this week, Mary noted that we shouldn't be surprised if we see some mean reversion, even if it's only temporary.

Aussie dollar sees positive close today, but bearish divergence noted

With all attention on the US Dollar, Gold and Bitcoin, you may have missed the Aussie dollar hitting the highest price since the 31st of January 2019.

And like all other major currencies pairs, no sooner had it hit that intraday high than it retraced to hit the lowest price for the session.

You can see the Aussie fought back by the end of the session to close in the top part of the daily range.

For many traders, this will be seen as a potentially bullish signal.

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But do be aware that on the daily AUD/USD chart, we are seeing bearish divergence show up on the stochastic indicator.

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Where to next for opportunities across the global markets?

With only Friday and Monday left to close out the August Stage 3 Trading Cup, we turn our attention to what could provide the best opportunities going forward.

We see the following technical signals early on Friday:

·         Aussie dollar on the cusp of a potential break into new short-term highs

·         GBP/USD also sitting close to a potential short-term break in the current consolidation

·         Bitcoin is testing the recent lows, sitting at the bottom of the recent range. Could it bounce from here and test the upside resistance levels?

·         Gold and Silver are forming wedge chart patterns with traders looking for a break either higher or lower

·         The USD/JPY is moving to the top of the recent range, sitting overbought and in a confirmed downtrend, hitting lower high after lower high.

·         And of course, the US indices have been powering forward, providing breakout traders plenty of opportunities.

Are you ready to join the next Stage? Click here to register an account.

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Ashley Jessen // Author of CFDs Made Simple, Head of Marketing at ACY Securities

Ashley Jessen is the author of CFDs Made Simple and Head of Marketing at ACY Securities. He has been in the financial services industry since the year 2000 and worked for some of the leading companies in the CFD, Forex and Online Trading space.