Fed's Powell: Strategy Around Both Jobs And Inflation Needs To Be Reconsidered

Forex

Economic

Summary:

U.S. Federal Reserve officials feel they need to reconsider the key elements around both jobs and inflation in their current approach to monetary policy given the inflation experience of the last few years and the possibility that supply shocks and the associated price increases may become more frequent in the years ahead, Fed chair Jerome Powell said Thursday.

Fed's Powell: Strategy Around Both Jobs And Inflation Needs To Be Reconsidered_1

"We may be entering a period of more frequent, and potentially more persistent, supply shocks—a difficult challenge for the economy and for central banks," Powell said in opening remarks at a two-day conference reconsidering the Fed's current approach to monetary policy, adopted in 2020 as the economy was still scarred by the pandemic.

"The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes," Powell said.

Powell did not focus on current monetary policy or the economic outlook, though he did say he expected April personal consumption expenditures price inflation to have fallen to 2.2% -- a tepid reading but still likely not reflecting coming tariff-driven price increases.

Still that reflects a "historically unusual result" of disinflation without major damage to the economy, a "soft landing" that did take place under the Fed's current strategy.

Five years ago the Fed recast its approach to allow more room for lower unemployment rates and pledged to use periods of high inflation to offset years in which inflation was weak, a common occurrence from 2010 to 2019.

The inflation that took off after that, and the emerging state of the global economy, means that approach may need a rethink, Powell said.

"In our discussions so far, participants have indicated that

they thought it would be appropriate to reconsider the language around shortfalls" of employment, a change adopted so the Fed would not consider a low unemployment rate in itself a sign of inflation risk, Powell said. "At our meeting last week, we had a similar take on average inflation targeting. We will ensure that our new consensus statement is robust to a wide range of economic environments and developments."

His comments point to possibly extensive revisions to a strategy that had been viewed at its inception as a major shift for the Fed, with a willingness to take more risks in favor of a stronger job market and a willingness to tolerate higher inflation after periods of weakness.

But "the idea of an intentional, moderate overshoot proved irrelevant to our policy discussions and has remained so through today" following the near double-digit inflation that occurred during the pandemic reopening, Powell said.

Source: Yahoo Finance

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Warren Takunda

Stocks

Wall Street veered lower before the opening bell Thursday and oil prices fell more than $2 a barrel as optimism over a possible U.S.-Iran nuclear deal rose.

Futures for the S&P 500 and Dow Jones Industrial Average each fell 0.4%. Nasdaq futures dipped 0.6%.

President Donald Trump, visiting Qatar as part of a three-country Middle East tour, has urged the nation to use its influence with Iran to persuade its leadership to dial back its rapidly advancing nuclear program. A deal would help pave the way to ease sanctions against Tehran.

U.S. benchmark crude oil lost $2.37 to $60.78 per barrel. Brent crude, the international standard, gave up $2.32 to $63.70 per barrel.

Oil prices surged early this week after China and the U.S. announced an agreement to scale back painfully high tariffs each has imposed on the other for 90 days. But they’ve since retreated after the U.S. Energy Administration reported relatively high crude oil stockpiles that could lead to an oversupply.

In equities markets, Walmart shares rose 2.2% after it reported strong sales but a decline in first quarter profit, and said it has to raise prices due to higher costs from tariffs.

Like many other U.S. companies, Walmart did not issue a profit outlook for the quarter because of the chaotic environment around rapidly changing U.S. trade policy. The company maintained its full-year guidance issued in February.

Foot Locker shares nearly doubled after Dick’s Sporting Goods said it was buying the struggling footwear chain for about $2.4 billion. It’s the second buyout of a major footwear company in as many weeks as business leaders struggle with uncertainty over how Trump’s tariffs will impact companies that make many of their products overseas.

Last week Skechers announced that it was being taken private by 3G Capital for $9 billion.

Dick’s said Thursday that it expects to run Foot Locker as a standalone unit and keep the Foot Locker brands, which include Kids Foot Locker, Champs Sports, WSS and the Japanese sneaker brand atmos.

Foot Locker shares soared more than 80% to $23.57 before the bell. Dick’s fell 8.5%.

Elsewhere, China moved to reverse some of its “non-tariff” measures against the U.S. as agreed with Washington in their temporary trade war cease-fire, while demanding that the U.S. side “immediately correct its wrong practices.”

A Chinese Commerce Ministry spokesperson accused the Trump administration of violating world trade rules by announcing that use of Ascend computer chips made by China’s Huawei Technologies violates U.S. export controls.

Japan’s Nikkei 225 index dropped 1% to 37,775.51. Computer chip-related stocks were among the biggest decliners, with Disco Corp. falling 3.2% and Advantest down 1.1%.

Hong Kong’s Hang Seng dropped 0.8% to 23,453.16, while the Shanghai Composite index lost 0.7% to 3,380.82. Taiwan’s Taiex fell 0.2%, while India’s Sensex rebounded to gain 1.6%.

In Australia, the S&P/ASX 200 edged 0.2% higher to 8,297.50. South Korea’s Kospi gave up 0.7% to 2,621.36.

European markets are mixed at midday with Germany’s DAX shedding 0.1%, while the CAC 40 in Paris fell 0.2%. Britain’s FTSE 100 was up 0.3%.

On Thursday, the government will release its April report for inflation at the wholesale level, as well as for retail sales and weekly jobless claims.

The latest retail data is expected to reflect a meager 0.2% sales increase in April, down significantly from a 1.4% gain the previous month.

The stock market has been relatively steady since surging Monday after the U.S. and China announced a 90-day pause in their trade war. The market gained more ground on Tuesday after the government reported that inflation unexpectedly cooled across the country in April.

Trump has delayed a large swath of his most severe tariffs against America’s trading partners, but some import taxes remain in place. Uncertainty over the path ahead continues to hang over businesses and consumers. The on-again-off-again nature of Trump’s trade policy has left companies reluctant to make plans about investment and hiring and consumers nervous about spending.

Businesses continue to trim or withdraw their financial forecasts as they face unpredictable trade policy and cautious consumers.

More than 90% of companies in the S&P 500 have reported earnings for their latest quarter and most reported better-than-expected earnings. But they have cut or scrapped forecasts for the current quarter and even the full year.

Source: AP

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Glendon

Economic

Forex

In a recent economic update, the Producer Price Index (PPI), a key indicator of consumer price inflation, recorded a surprising downturn. The actual figure was reported at -0.5%, a number significantly lower than the forecasted 0.2%.

This unexpected drop in PPI, which measures the change in the price of goods sold by manufacturers, has left market analysts and investors slightly taken aback. The forecast had predicted a modest increase of 0.2%, indicating a healthy, albeit slow, growth in the manufacturing sector. Instead, the actual figure plummeted to -0.5%, marking a stark contrast to the forecasted numbers.

When compared to the previous PPI figure, which stood at a flat 0.0%, the current reading further emphasizes the downward trend. The negative figure indicates a decrease in the prices of goods sold by manufacturers, which can be a precursor to a dip in consumer price inflation.

The PPI is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation. Therefore, a lower PPI often signals a potential decrease in overall inflation. This could have various implications for the economy, including a potential slowdown in economic growth and a decrease in consumer spending.

In terms of the currency market, the lower than expected PPI reading can be seen as bearish for the US dollar (USD). A decrease in the PPI often leads to lower inflation, which in turn can decrease the value of the USD. As a result, investors and traders will be keeping a close eye on the USD, as further fluctuations in the PPI could lead to significant shifts in the currency market.

As the market digests this unexpected change, all eyes will be on the Federal Reserve and other economic indicators for signs of how this could impact the broader US economy.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Source: Investing

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Michelle

Economic

Forex

The US economy witnessed a marginal increase in retail sales, according to recent data. The actual increase in retail sales was reported to be 0.1%, a figure that falls significantly short of the forecasted growth of 0.0%.

This slight growth of 0.1% in retail sales is a stark contrast to the previously recorded rate of 1.7%. This indicates a slowdown in consumer spending, which is a key driver of overall economic activity. The retail sales data is seen as a critical barometer of consumer spending patterns and sentiment, and the current numbers point towards a cautious approach by consumers.

The forecast for retail sales growth had been set at 0.0%, indicating an expectation of stability in the market. However, the actual figures have fallen short of these predictions, albeit showing a small increase. This suggests that while there is growth, it is not at the pace anticipated by market forecasters.

Compared to the previous figure of 1.7%, the current growth rate of 0.1% represents a significant drop. This decline could be indicative of a variety of factors, including changing consumer behaviors, market uncertainties, or economic policy impacts.

The retail sales data is closely watched by economists and investors alike as it provides insights into the health of the consumer sector, which forms a substantial part of the US economy. The lower than expected reading is likely to be interpreted as bearish for the USD, as it suggests a slowdown in consumer spending.

While the slight increase in retail sales could be seen as a positive sign of growth, the fact that it falls short of both the forecasted figures and the previous month’s figures raises questions about the strength and stability of consumer spending in the coming months. This data will be closely scrutinized by policymakers and investors as they navigate the economic landscape.

Source: Investing

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Glendon

Economic

Stocks

Asian Session Market Wrap

Asian stocks dropped on Thursday after rising for four straight days, as the boost from US-China trade talks started to fade.

Stocks in Japan, China, and US futures all fell, showing a more cautious mood after a week of strong gains driven by trade progress and steady economic performance. Investors are concerned that stocks have risen so much they could be easily affected by unexpected events. European stock futures also dipped slightly.

The European Open

Heading into the European open, European shares were being weighed down by energy stocks which saw big losses due to falling oil prices, while investors looked ahead to important U.S. economic data and comments from Federal Reserve Chair Jerome Powell.

Oil prices fell over 3% due to the possibility of a U.S.-Iran nuclear deal, which could lift sanctions and increase supply. Big oil companies like BP and Shell saw their shares drop by 5% and 3%, pulling down the main stock index.

Gold prices faltered once more with the precious metal printing an Asian session low of around the $3125/oz handle before recovering to trade around $3158/oz at the time of writing.

Looking at US equities, the mood remained positive in the Asian session as markets still digest a US-China trade truce, a UK agreement, and major Gulf deals which have boosted investor confidence.

The S&P 500 went up by 0.1% overnight, and the Nasdaq 100 rose 0.5%, driven by Nvidia’s gains, which erased its 2025 losses.

Following the European open however, both the S&P 500 and Nasdaq have turned red for the day, trading 0.57% and 0.85% lower respectively.

On the FX front, safe-haven currencies like the Japanese yen and Swiss franc strengthened, with the yen rising 0.6% to 145.88/USD after hitting a one-month low of 148.65 earlier this week. The Swiss franc also gained 0.6%, reaching 0.8376/USD.

The euro increased by 0.2% to 1.12. A Bloomberg report on Wednesday mentioned that the US is not pushing for a weaker dollar in tariff talks, which helped ease market worries.

The dollar index, which tracks the dollar against six other currencies, fell 0.2% to 100.81 but is still set to gain 0.4% for the week. However, the index is down nearly 7% for 2025.

Currency Power Balance

Source: OANDA Labs

Economic Data Releases and Overall Sentiment

Looking at market sentiment, it remains largely positive. The main focus will be U.S. retail sales data, and investors will also watch for updates on potential trade deals following the U.S.-China tariff truce.

There will also be a speech by Fed Chair Jerome Powell and earnings from Walmart which could rattle markets ahead of the US Open.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the day – DAX

From a technical standpoint, the DAX index has been consolidating above a key support area having printed fresh all-time highs on Monday.

The support area between 23212 and 23471 continues to hold firm underpinning the index and providing bulls with optimism that another bullish leg may be in offing.

A move higher still needs a clear break and acceptance above the 24000 handle which could lead to a bigger move to the upside.

On the downside, a break of support at 23212 could open up a retest of the 20 and 50-day MAs which rest at 22704 and 22460 respectively.

DAX Daily Chart, May 15, 2025

Source: TradingView.com (click to enlarge)

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

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Warren Takunda

Stocks

London stocks had turned positive by midday on Thursday but gains were muted despite better-than-expected UK GDP figures, as declining oil prices weighed on energy firms.

The FTSE 100 was up 0.1% at 8,591.35.

Data released earlier by the Office for National Statistics showed that the economy grew more than expected in the first three months of the year.

Gross domestic product rose 0.7% in the first quarter, up from 0.1% growth in the final quarter of last year and ahead of consensus expectations for 0.6% growth.

The ONS said growth was driven largely by a 0.7% increase in the services sector, while production grew 1.1% and the construction sector showed no growth.

ONS director of economic statistics Liz McKeown said: "The economy grew strongly in the first quarter of the year, largely driven by services, though production also grew significantly, after a period of decline.

"Growth in services was broad based, with wholesale, retail and computer programming all having a strong quarter as did car leasing and advertising. These were only slightly offset by falls in education, telecoms and legal services."

Russ Mould, investment director at AJ Bell, said: "A big pullback in oil prices weighed on markets across Europe.

"Traders focused on the prospect of a US/Iran nuclear deal which could see economic sanctions lifted on the latter and potentially lead to greater supplies of oil. That weighed on shares in BP and Shell which pulled down the FTSE 100. Commodities trader Glencore was also weak."

In equity markets, JD Sports was the top performer on the FTSE 100 following a report that US peer Dick’s Sporting Goods is nearing a deal to buy Foot Locker for around $2.3bn.

National Grid advanced after its full-year earnings beat forecasts.

Aviva gained as the insurer said it was confident in achieving its group targets after a "great start" to 2025, with premiums rising by almost a tenth.

Serco shot up after it was awarded three contracts with a combined value of over £1bn by the UK Ministry of Defence to provide maritime services for the Royal Navy.

Watches of Switzerland rallied as it reported a jump in full-year revenues as it returned to growth in the UK and US.

On the downside, Sage Group slumped even as the enterprise software firm extended its share buyback plan by £200m after a strong first half.

3i Group fell sharply as its full-year total return of £5bn missed market expectations.

Oil giants BP and Shell gushed lower as oil prices slid.

Spectris and PageGroup both lost ground as they traded without entitlement to the dividend.

Source: Sharecast

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Michelle

Technical Analysis

On-chain data shows the Ethereum Exchange Netflow has remained negative during the past week, a sign that could be bullish for ETH.

Ethereum Exchange Netflow Suggests Trend Of Withdrawals

In a new post on X, the institutional DeFi solutions provider Sentora (formerly IntoTheBlock) has talked about the latest trend in the Exchange Netflow of Ethereum. The “Exchange Netflow” here refers to an on-chain metric that keeps track of the net amount of the cryptocurrency moving into or out of the wallets associated with centralized platforms.

When the value of this metric is positive, it means the investors are depositing a net number of tokens to these platforms. As one of the main reasons why holders transfer to exchanges is for selling-related purposes, this kind of trend can have a bearish impact on the ETH price.

On the other hand, the indicator being under zero suggests the outflows are outweighing the inflows. Generally, investors take their coins away from the custody of exchanges for holding into the long term, so this kind of trend can prove to be bullish for the asset.

Now, here is the chart shared by the analytics firm that shows the trend in the Ethereum Exchange Netflow over the past week:

The value of the metric appears to have been negative in recent days | Source: Sentora on X

As displayed in the above graph, the Ethereum Exchange Netflow has mostly been negative inside this window, which implies the holders have been pulling supply out of the centralized exchanges.

In total, the investors have made withdrawals worth $1.2 billion with this outflow spree. “This sustained trend of net outflows, intensifying since early May, signals continued accumulation and reduced sell-side pressure,” notes Sentora.

While ETH has seen this bullish development recently, the cryptocurrency may not be offering that good an entry opportunity right now, as the analytics firm Santiment has explained in an Insight post.

The data for the 30-day and 365-day MVRV Ratios of ETH | Source: Santiment

The indicator shared by the analytics firm is the “Market Value to Realized Value (MVRV) Ratio,” which basically provides a measure of the profit-loss situation of the Bitcoin investors.

In the chart, Santiment has included two versions of the indicator: 30-day and 365-day. The former tells us about the profitability of the investors who purchased within the past 30 days and the latter that of the past year buyers.

As is visible in the graph, the 30-day MVRV Ratio for Ethereum has a notable positive value right now, implying the recent buyers are in significant profit. More specifically, the metric is sitting at 32.5%, which is well above the 15% danger zone for altcoins that the analytics firm recommends as a rule-of-thumb.

“It may not mean that prices are about to drop, but it does suggest that the rally will likely slow or halt until the 30-day MVRV dips back down to something more reasonable,” explains Santiment.