Comments yesterday by Fed Chair Jerome Powell suggesting that US inflation is now established within a downwards trend sent major equity indices higher with several making record high daily closes yesterday.
- In public remarks yesterday, Fed Chair Jerome Powell stated that inflation in the USA is clearly on a downwards trend, and these remarks were taken by the market as having a dovish intent portending an earlier rate cut. The CME FedWatch tool now shows a small increase in the numbers expecting a rate cut at the Fed’s September meeting, to 65%. This sentiment pushed stock markets higher, with both the NASDAQ 100 and the S&P 500 making record high closes, the NASDAQ above 20,000 and the S&P 500 above 5,500 each for the first time ever. Asian equities have followed the US higher during today’s Tokyo session, with the Nikkei 225 Index only about 1% below its all-time high. Trend traders will be interested to be long of major equity indices now.
- Markets are awaiting the release later today of the Fed’s FOMC Meeting Minutes, which will be examined for clues as to the thinking of Fed members at its previous meeting.
- The Japanese Yen is continuing to weaken, with the USD/JPY currency pair trading at a new 38-year high of ¥161.87 towards the end of the Tokyo sessiom. Trend traders will be interested in being long of this pair, and/or in certain Yen crosses. Vanguard sees ¥170 as a possible target if the Bank of Japan fails to boost yields soon.
- In the Forex market, the Australian Dollar is the strongest major currency since the Tokyo open, while the Japanese Yen is the weakest. This make sense as sentiment shift to a more risk-on emphasis, as the Aussie is a key risk-on currency. It is also worth noting that the US Dollar remains within a valid long-term bullish trend.
- Yesterday’s Eurozone Core CPI flash estimate was just a fraction higher than expected, with the Core CPI Flash Estimate staying at an annualized rate of 2.9% when it had been expected to drop to 2.8%.
- Yesterday’s US JOLTS Job Openings data came in slightly higher than expected.
- There will be releases today of the following potentially high-impact data in the USA:
- ADP Non-Farm Employment Change
- ISM Services PMI
- Unemployment Claims
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