investingLive Americas FX news wrap 22 Aug: Markets cheer on Powell tilt (for now)

Fed Chair Jerome Powell delivered his extremely anticipated tackle on the Jackson Gap symposium, providing markets contemporary perception into the central financial institution’s coverage stance heading into the September FOMC assembly. His remarks acknowledged a “curious steadiness” within the labor market, persistent although tariff-driven inflation pressures, and the Fed’s ongoing problem of balancing its twin mandate. Powell struck a tone that leaned cautiously dovish, leaving the door open to fee cuts whereas stressing that choices stay firmly anchored to incoming knowledge and the evolving financial outlook

Key Highlights

Door to September fee lower opened

Powell recommended the Fed could take into account slicing charges subsequent month, noting each labor demand and provide are slowing. Whereas he stopped wanting committing to a transfer, his tone leaned extra dovish.
Labor market dangers rising

Job progress has weakened, with dangers of a sooner rise in unemployment. Powell pressured the steadiness of dangers has shifted, placing employment on extra fragile footing.
Tariff-driven inflation seemingly short-term

Tariffs are pushing up costs, however Powell emphasised that these results are seemingly short-lived one-time shifts, not a long-lasting inflation dynamic. Nonetheless, he flagged dangers from potential wage–value spirals or rising expectations.
Fed stays data-driven and impartial

Powell reaffirmed that the Fed’s path is not preset, with all choices based mostly on incoming knowledge. He additionally underscored the Fed’s independence amid exterior political pressures.

Later, Fed’s Hammack (2026 voter) struck a extra hawkish/much less dovish tone than markets took from Powell. She emphasised that inflation stays too excessive and continues to strain households, requiring the Fed to maintain coverage principally restrictive. Whereas she famous the Fed is just modestly restrictive and near impartial, she pressured that the main target should stay squarely on bringing inflation again towards goal. Hammack mentioned she is open-minded going into September, with extra knowledge to evaluate, however underscored {that a} vital weakening in unemployment can be wanted to justify simpler coverage. For now, she views dangers as tilted towards persistence in inflation and signaled warning in opposition to easing too rapidly.

Though the Fed chair laid the pipe for a lower, US jobs knowledge and US inflation knowledge are to come back. The market did begin to value in additional of a lower. With the futures now pricing in a 90% likelihood of a lower in September.

US shares moved sharply larger. Previous to the leap, the NASDAQ index was threatening to make a break beneath and away from its 200-hour shifting common earlier this week (at 21169) and certainly did commerce beneath that shifting common degree this week. Nevertheless, with at present’s good points the worth surged again above that key shifting common degree and likewise again above its 100-hour shifting common at 21368. The consumers are again in job management.

Regardless of the good points at present, the NASDAQ index nonetheless closed the decrease for the week (-0.58%). The S&P and Dow industrial common did shut larger with the Dow industrial common rising by 1.53%. The S&P had a modest achieve of 0.27%. The small-cap Russell 2000 of the again of a 3.86% rise at present shut the week up 3.298%.

European equities closed the session larger throughout the board, extending good points into the week. The German DAX rose 0.29%, the French CAC gained 0.40%, and the UK FTSE 100 superior 0.13%, ending at a new file excessive. Southern Europe led the day, with Spain’s Ibex up 0.61% and Italy’s FTSE MIB climbing 0.69%, each settling at 17–18 yr highs. For the week, momentum was additionally constructive: the DAX added 0.02%, the CAC 0.58%, the FTSE 100 2.0%, the Ibex 0.78%, and the FTSE MIB 1.54%, underscoring broad power in European markets