Markets ended the first day of the week in the green as the air of expectation around Powell’s speech only grows.
The SPX finished the day up by more than 1% as markets are starting to believe Powell will signal there are more rate cuts on the way for the US. There was talk that the last meeting of the FOMC (of which the minutes will be released this week), had multiple members wanting more cuts or even cuts greater than the 25 bp we saw.
With that in mind, it was GOLD that was the big loser, falling below the all-important $1500 level for the first time in a number of sessions.
The USD remains on its bullish track despite the fact that the FOMC could be pushing for further cuts. That’s a little counterintuitive, but the Greenback has been hit pretty hard recently on the back of the Yuan devaluation.
Once again, markets will be waiting for both the FOMC minutes and then Powell to speak to Jackson Hole, but either way things are shaping p nicely for another busy week.
Asian Market Outlook
This morning all the attention is on the AUD/USD as we get the latest update on the RBA minutes. I mentioned over the weekend that a fair bit has changed since the meeting that saw the OCR left unchanged.
We’ve had some good growth in jobs and CPI which is exactly what the doctor ordered.
Last time around we did hear a rather dovish tone, with the RBA prepared to act with more cuts if required, so we will see just how new the information we get today is going to be.
The Aussie is under the key 0.6800 level after failing on another push higher yesterday and overall is clearly still bearish headed into the minutes.