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ECB President Christine Lagarde: I am confident that the practice of basing policy on data should be maintained.European Central Bank President Christine Lagarde: We have not seen artificial intelligence causing redundancy in the labor market.European Central Bank President Christine Lagarde: We are monitoring exchange rates, not setting exchange rate targets.On February 26th, European Central Bank (ECB) President Christine Lagarde reiterated that the ECB has successfully controlled consumer prices, but cautioned that policymakers must closely monitor perceived high inflation. She stated, "Officials will achieve the 2% growth target in the medium term. However, despite the decline in inflation, surveys show that many people still feel prices are rising faster than official data suggests." While ECB policymakers emphasized that their next interest rate adjustment will have "full flexibility," they have not indicated any intention to make any adjustments in the near term. They expect inflation to stabilize at the 2% target level in the medium term, with economic growth accelerating. However, some believe there is a possibility of inflation remaining below target for an extended period. According to the latest consumer expectations survey, perceived inflation is higher than actual data suggests. This could negatively impact private consumption and lead to higher wage demands, making the central banks task of maintaining price stability and promoting economic growth even more challenging.Gold prices fell slightly in early trading on February 26, but remained above $5,100 an ounce as investors focused on progress in US-Iran negotiations. New York gold futures edged lower as investors worried that US interest rates might remain unchanged for some time, limiting gains. However, prices still rose more than 3.5% this week, benefiting from uncertainty surrounding US trade policy and ongoing geopolitical tensions with Iran. "Any escalation of tensions involving Iran could provide further support for gold and strengthen its role as a hedge against shocks," said analysts at ING. "Meanwhile, the structural drivers behind golds previous gains remain solid."

The Dollar Fell as Riskier Assets Surged in Response to the Fed's Decision

Daniel Rogers

May 05, 2022 11:13

USD/CAD fell dramatically in the aftermath of the Fed meeting and during the press conference of the Fed Chair. The Federal Reserve concluded its two-day monetary policy meeting on Wednesday, hiking interest rates by 50 basis points and signaling to the markets that it will continue to monitor the market environment.

 

On June 1, the Fed will begin reducing its balance sheet. This was a foregone conclusion and is seen as quantitative tightening.

 

The Federal Reserve will initiate the run-off of 47 billion and 95 billion dollars off its balance sheet in three months. Consumer and business expenditures continue to be robust. Economic activity was almost certainly harmed by the invasion of Ukraine. The Fed stated that the Chinese lockdowns would almost certainly result in more supply chain disruptions.

Technical Evaluation

On Wednesday, the USD/CAD reversed and fell. It reached 2022 highs early in the week and then consolidated. Near the May high of 1.2920, resistance is present. Support is seen near the 1.2685 20-day moving average. The 20-day moving average has crossed above the 50-day moving average, indicating the start of a medium-term uptrend.

 

Short-term momentum reverses to the downside as the fast stochastics may be approaching a crossover sell signal. The medium-term momentum is bullish, since the MACD line generated a buy signal upon crossover. The MACD's trajectory is bullish but decelerating, indicating consolidation.

 

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