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From the Floor: Trump to pick Powell, says WSJ — #SaxoStrats

#SaxoStrats
   • Trump to select Jerome Powell as new Fed chair: WSJ
   • Facebook Q3 earnings post strong beat, Tesla down on battery delays
   • Dax index preparing for run to 13,500, 13,380 level crucial
   • Silver preparing to rally but needs support from gold
   • Crude rally pauses as US production, exports rise

SaxoStrats
By Michael McKenna

The Wall Street Journal and other major financial media outlets are reporting that US president Donald Trump is set to pick Jerome Powell as the new Federal Reserve chair in a move that many consider to represent an extension of Yellen-era policy.

The dollar action was muted on the news, but volatility could pick up later today when Washington is slated to release details on its long-awaited tax reform plans.

"We don't really know what this Fed is going to look like yet," cautions Saxo Bank head of FX strategy John J Hardy, who notes that the new appointee's to the central bank's board of governors could prove as influential on the dollar's direction as the chair pick.

Beyond the US, we have the Bank of England out with a "Super Thursday" release of an interest rate decision, the latest update from the Monetary Policy Committee, and data on inflation.

According to Hardy, Super Thursday is a point of market focus following the recent sterling rally with 1.33 as the level to watch in cable as both GBP and USD fluctuate.

In earnings, Wednesday saw Facebook post a strong third-quarter beat with revenues up to $10.3 billion versus $9.8bn expected while earnings-per-share rise to 1.59 versus 1.28 expected.

Monthly Active Users also rose to 2.07 while CEO Mark Zuckerberg cautioned that incoming efforts to target what he termed "misuse of the platform" are likely to impact profitability.

Tesla shares, meanwhile, plunged after-market Wednesday as the firm delayed production targets yet again, pushing its weekly goal of 5,000 cars into "late Q1" in response to production issues with the cars' battery packs.

Tesla:
Tesla

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Source: Saxo Bank 

"Tesla's cash burn is really excessive," says Saxo Bank head of equity strategy Peter Garnry, adding that that the company will doubtlessly need to raise capital soon if these delays continue.

Meanwhile, Saxo commodities chief Ole Hansen reports that silver is preparing to break out but needs report from gold, which remains stuck in its $1,263-82/oz range. Gold, he adds, is presently supported by a surge in Chinese demand with XAUXAG reaching 74.15 support.

In crude oil, Hansen tells us that the recent rally has paused for the moment on US production rises and record exports, but he adds that "bulls remain in control for now but the rally, if it continues, will soon threaten to extend beyond what is fundamentally supported".

Federal Reserve
Powell is in, says the financial media, but tax reform and the Mueller probe
remain USD risk events. Photo: Shutterstock

Michael McKenna is senior editor at Saxo Bank

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