Chairwoman of the Federal Reserve, Janet Yellen, hinted at the possibility of raising interest rates in her keynote speech at the Jackson Hole symposium last week. The unexpected news sent currencies, oil, gold and equities into a frenzy, with most markets closing in negative territory, except the CAD and JPY.
And it wasn’t just comments made by Chairwoman Yellen that pushed markets so violently. In a CNBC interview on Friday, Fed Vice Chairman Stanley Fischer said the FED should begin "a program of gradual rate increases.”
Fed governor Jerome Powell also echoed Fischer’s comments on Friday in an interview with Bloomberg, saying that serious discussion about raising rates needs to take place at the next meeting in September.
Atlanta Fed President Dennis Lockhart, St. Louis Fed President James Bullard, Dallas Fed President Robert Kaplan and Cleveland Fed President Loretta Mester made similar remarks over the weekend.
The daily charts for most major FX pairs like the EUR/USD closed off last week with massive bearish engulfing candles:
Stocks, crude oil and gold are also showing significant bearish engulfing candles on the daily charts:
This should be a very interesting week for global financial markets. Equities have been grinding away in directionless chop since the middle of July and last week's comments by Chairwoman Yellen may finally catalyze stocks out of their comma. If the massive bearish candles are to be believed: it may be a very painful week for equity markets.