Powell indicates willingness to stand up to Trump

Federal Reserve Chair Jerome Powell stated that he would not resign from his position if re-elected President Donald Trump were to request it. This statement follows the Fed’s decision to lower interest rates by a quarter percentage point on Thursday.

During a post-meeting press conference, when asked if he would step down at Trump’s request, Powell firmly stated, “No.” He added that the removal or demotion of any Federal Reserve board leaders, including himself, is “not permitted under the law.”

Powell mentioned that the US presidential election will have “no effect” on the central bank’s policy decisions in the near term, emphasizing that it is too early to determine the timing or substance of any potential fiscal policy changes.

Federal officials unanimously reduced the federal funds rate to a range of 4.5% to 4.75%. This second consecutive rate cut followed a larger half-point reduction in September, continuing efforts to maintain the stability of the US economic expansion.

S&P 500 set for best week this year

US equity futures remained stable, with the S&P 500 on track for its best week in a year after Donald Trump’s election as US president triggered a risk-on frenzy. US Treasuries gained ground, recovering much of their losses from the post-election period.

The excitement surrounding potential tax cuts and deregulation under Trump has driven the US equity benchmark to nearly reach the 6,000 mark. Meanwhile, bonds received some relief after the Federal Reserve announced a quarter-point interest rate cut and indicated the possibility of further easing next month.

China unveils $1.4 trillion debt swap

China announced a 10 trillion Yuan ($1.4 trillion) initiative to address its local government debt crisis, as authorities sought to bolster a slowing economy facing new risks from Donald Trump’s re-election.

Officials provided more details about a debt swap plan that was approved by the Standing Committee of the National People’s Congress during a press briefing in Beijing on Friday. They announced that funding for this program, which had been hinted at last month but lacked a specific budget, will be allocated through 2028.

The local debt swap plan’s scale was near the upper limits of what many economists had predicted; however, it disappointed the markets because it did not include new public spending to spur growth. Trump’s significant comeback in the election heightened expectations that Beijing would implement policies to boost domestic demand, aiming to offset a potential drop in exports due to the president-elect’s threats of tariffs.

DXY remains above 104.50 support

The US Dollar Index has decreased by more than 50% from its post-election rally. However, it continues to hold above the support level of 104.50, which should be monitored closely as the weekly close approaches. Meanwhile, the technical indicators show that the index is overbought on most timeframes, suggesting a greater likelihood of further declines in the future.

A break below 104.50 is necessary for further declines. If this occurs, the next support level is at 104.0, followed by 103.75.

EURUSD remains below 1.08

The Euro has recovered over 50% of the decline that occurred following the announcement of the U.S. election results. However, the currency pair has not yet stabilized above 1.08, which is something traders should monitor as the weekly close approaches.

The technical indicators are gradually improving after being in an oversold condition. A weekly close above 1.08 would indicate a favorable outlook for further gains next week. If the Euro manages to close the week above 1.08, the next resistance levels to watch will be at 1.0850, followed by 1.0900.

AUDUSD bullish outlook

This week, the Australian dollar is the second-best performing currency, following the Norwegian krone, in light of the US election results. One of the main reasons for the strength of the Australian dollar is the anticipated policy divergence between the Federal Reserve and the Reserve Bank of Australia.

In the meantime, maintaining a position above 0.66 is crucial for next week’s trading. A weekly close above that level would open the door for further gains, with the next resistance at 0.6640, followed by 0.6750.

Gold may remain under pressure

Gold prices recovered some of the sharp decline that occurred on the night of the US elections. However, despite this recovery, the short-term outlook on the daily chart remains strongly bearish. The technical indicators, including the RSI, are trading below the key level of 50.

The next support level is at 2660; a break below this could lead to further declines, potentially targeting the next key support at 2600.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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