Palladium May Rise With Oil-Linked NOK On Powell Testimony

FED CHAIRMAN JEROME POWELL CONGRESSIONAL TESTIMONIES

Fed Chairman Jerome Powell will be giving two congressional testimonies to the House Financial Services Committee and Senate Bank Committee. If he strikes unexpectedly optimistic tones – especially after last week’s NFP numbers – it may kindle risk appetite and boost demand for commodities like palladium and currencies like the oil-linked Norwegian Krone.

Norwegian Krone Expected to be Second Most-Volatile Currency vs US Dollar Over One Week

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US-CHINA TARIFF REDUCTION: WHAT NEXT?

The US and China are both expected to lower tariffs against each other as part of their initial agreement in “Phase 1” of their multi-sequential trade deal. There were some concerns that due to the coronavirus outbreak and impact it is having on China that it would not be able to meet certain trade stipulations outlined the accord. For Palladium, weaker demand from the Asian giant could spell doom for its unprecedented rally.

However, news on Friday indicated US President Donald Trump and his Chinese counterpart Xi Jinping remain committed to the implementation of “Phase 1”. Those fading fears may then boost sentiment and make investors more inclined to trade growth-sensitive assets. Consequently, if this same kind of rhetoric is reaffirmed on Friday, Brent, palladium and the Norwegian Krone may rise.

RIKSBANK RATE DECISION: WHAT TO EXPECT

The Riksbank is expected to hold interest rates at zero percent after it exited negative rate territory late last year. Volatility in the Swedish Krona will therefore likely come from commentary by officials and their outlook on policy. Swedish credit markets have shown recent jitters with the Stockholm Interbank Offered Rate having jumped over 100 percent since the start of the year and is now at its highest point since 2015.

While this may not constitute an immediate emergency, the sharp rise in interbank lending rates could speak to an underlying problem that has yet to reveal itself. One concern is the ballooning of household debt that has gone hand in hand with the steep rise in housing prices. Mortgage lending totals $450 billion with banks remaining highly-exposed to the market with alarmingly-low liquidity and exposure to external risks.

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Sandy Newman 4 months ago Member's comment

It didn't raise at all that day, but after...