Barclays had previously only penciled in just one rate cut for December while BNP Paribas was not expecting the Fed to cut rates at all this year before this. It's clear that Fed chair Powell's speech on Friday is being treated as a pivot of sorts. But now, all eyes will be on the US jobs report on 5 September to seal the deal. This article was written by Justin Low at investinglive.com.

Fed chair Powell kept the door open for a move in September after he acknowledged risks surrounding the labour market and the economy. He noted that such conditions may warrant a policy adjustment, highlighting a "curious kind of balance" in the labour market especially.That was enough to get markets going with traders and investors taking that as a sign of a more dovish tilt going into September. Fed funds futures now seen ~84% odds of a 25 bps rate cut for next month. And basically, markets will look to the non-farm payrolls release on 5 September to confirm such a move.Powell did highlight that they are still very much data dependent but by opening the door with his choice of words, it pretty much means a softer set of labour market numbers should confirm a rate cut for September. Now, it'll be interesting to see how the rest of the voting members feel about the current predicament.So, what can we expect next from the Fed and market developments?Well, the simplest scenario is that we see another much weaker jobs report and that will likely confirm a rate cut for next month. However, don't expect the pressure on the Fed to stop there in such a case. Trump will continue to call for Powell's head, in trying to influence markets that the Fed is well behind the curve.And a continuation of softer data will certainly reinforce that argument.But what happens if the upcoming jobs report is one that comes in stronger? I reckon it won't put off the narrative of a rate cut but it will certainly leave markets in a bit of a bind. That especially if the Fed pricing we're seeing here holds until the end of next week.In that case, there's only one of two things that could play out next. One, that markets choose to conveniently ignore the data and reaffirm that it just means a soft landing scenario is still well intact. In that case, the Fed need not rush to cut rates but may still choose to kick things off in September. The question is, will markets try to bully the Fed into a decision then?If so, all the weight is on the Fed's shoulders to deliver on those expectations i.e. the Fed put. So, Powell & co. will face quite a decision should we see the jobs report hold up and even more so if the inflation numbers the following week also reinforce some form of tariffs passthrough. Yes, don't forget that we still have another US CPI report to work through but it will come during the FOMC blackout period.And that's pretty much how the other side of the coin could play out. That even with Powell's comments here, he hasn't exactly fully committed or pre-commit to a rate cut in September. All he has done is leave the door open.So if there is significant impact from tariffs on inflation and the labour market remains more resilient after the slight scare last month, then what's the rush? The issue with this argument is that we might still need more time to factor in any form of tariffs passthrough on inflation. We continue to wait on that month after month but even the latest numbers for July were not too significant.As such, the Fed might not get their reaction function right at the end of the day but perhaps it might not matter too much. That unless the bond market throws up a fuss by kicking and screaming until the central bank listens. This article was written by Justin Low at investinglive.com.

The yen weakened in Asia with USD/JPY rebounding toward 147.50 in what looked like a retrace of Friday’s Powell-driven drop. Broader FX moves were modest, while upbeat New Zealand retail sales highlighted the boost from lower RBNZ rates. Asia-Pacific equities gained on Powell’s signal that a September Fed cut remains in play.HSBC raises China equity targets on abundant liquidity, sees SHCOMP at 4,000 in 2025Heads up for a UK holiday today - London markets closedGoldman Sachs raises Chinese AI-chip giant Cambricon’s target price by 50%,Japan finance minister Kato: Will establish appropriate environment for crypto assetsNomura boosts conviction on USD/JPY short after Powell’s dovish tone, eyes 142 by OctoberHedge funds slash oil longs to 2008 lows as sanction risk eases, supply fears growPBOC sets USD/ CNY reference rate for today at 7.1161 (vs. estimate at 7.1551)Pantheon: Powell's big shift signals jobs risk; Fed seen cutting rates three times in 2025Goldman Sachs - Powell warns of rising job market risks as GDP growth slowsKeurig Dr Pepper nears $18bn deal for JDE Peet’s, plans split of coffee and beverage unitsEvergrande delisted in Hong Kong, sealing fall of China’s $50bn property giantICYMI - Starbucks to cut U.S. coffee plant output by two days every week - demand softensNew Zealand data - Q2 Retail Sales +0.5% q/q (vs. expected +0.2%)First U.S. human screwworm case confirmed in Maryland, sparking livestock market concernsFed’s Musalem: More data needed before deciding on September rate cutGlobex is open! US equity index futures inch a little higher then back it upICYMI - Italy’s Tajani urges ECB cuts, QE revival and SME credit boost to aid industry!ICYMI - ECB’s Nagel: ‘High bar’ for further rate cuts with eurozone in equilibriumECB's Lagarde: Eurozone jobs resilient as inflation falls with little cost to employmentVon der Leyen: EU–US trade pact for averting escalation, easing risks for euro, exportersECB’s Kazaks: Rates in ‘good place’ as officials shift focus to monitoring economyBOE’s Bailey: Weak participation, productivity leave UK with ‘acute growth challenge’BOJ’s Ueda: More women, foreign workers needed as aging Japan faces labor squeezeReuters cite five sources as saying the ECB may begin cutting rates again later in 2025Monday open levels, indicative FX prices, 28 July 2025 -Newsquawk Week Ahead: US PCE, PBoC MLF, ECB minutes, Aus CPI, Canada GDP, NVDA earningsNVDA earnings on Wed. Consider hedging.investingLive Americas FX news wrap 22 Aug: Markets cheer on Powell tilt (for now)The yen led moves in Asia, with USD/JPY climbing from sub-146.75 to around 147.50 before flattening. The move appeared to be a retrace of Friday’s post-Powell drop, rather than a response to fresh news. BOJ Governor Ueda spoke over the weekend and hinted at the potential for further rate hikes, a yen-supportive signal.The dollar’s strength spilled over modestly into other pairs, with EUR/USD edging lower and early weakness in AUD, NZD, and GBP later retracing. On the data front, New Zealand retail sales surprised to the upside in Q2, a sign that lower RBNZ rates are boosting household consumption and supporting recovery.Across equities, Asia-Pac markets traded mostly higher, buoyed by expectations that Powell’s Jackson Hole remarks have left the door open to a September Fed rate cut. Asia-Pac stocks:Australia (S&P/ASX 200) +0.3%Hong Kong (Hang Seng) +1.9%Shanghai Composite +1.2%Japan (Nikkei 225) +0.25%Cattle and livestock traders will want to note that the first U.S. human screwworm case was confirmed in Maryland. Screwworms are parasitic flies that lay eggs in open wounds, with larvae burrowing into living flesh. In animals, infestations can be fatal if untreated. This article was written by Eamonn Sheridan at investinglive.com.

HSBC has raised its end-2025 targets for China’s major equity benchmarks, citing abundant liquidity as the key driver. The bank now sees the Shanghai Composite (SHCOMP) at 4,000 (up from 3,700), the CSI 300 at 4,600 (from 4,300), and the Shenzhen Composite (SZCOMP) at 13,000 (from 11,500). HSBC said ample liquidity conditions should underpin valuations and support a gradual recovery in Chinese equities. This article was written by Eamonn Sheridan at investinglive.com.

European markets are open today, but the UK is closed for a holiday. UK markets will be absent, which will mean much less liquid trade in the EU/UK timezone. Just a heads up. This article was written by Eamonn Sheridan at investinglive.com.

Goldman Sachs lifted its price target on Cambricon to CNY 1,835, up from the current share price of 1,243.The bank cited three key drivers behind the upgrade:Rising capital expenditure from China’s cloud giants such as Tencent.Broader diversification of chipset platforms, including developments like DeepSeek 3.1.Continued investment in research and development. ---Cambricon Technologies is a Beijing-based, partially state-owned semiconductor firm founded in 2016 as a spin-off from the Chinese Academy of Sciencesspecializes in designing AI processors and GPGPUs for deep learning applications across cloud servers, edge devices, and intelligent terminalsnicknamed “China’s Nvidia” This article was written by Eamonn Sheridan at investinglive.com.

Japan finance minister Kato:Will establish appropriate environment for crypto assetsCrypto assets can also be part of diversified investments This article was written by Eamonn Sheridan at investinglive.com.

Nomura’s Global Markets Research team said Fed Chair Jerome Powell’s dovish tone last Friday opens the door for further downside in the dollar against the yen. Powell’s remarks have raised the probability of a September rate cut, reinforcing the view that USD is likely to remain under pressure in the near term.“We have a higher conviction on our short USD/JPY trade,” the team wrote, reiterating a target of 142.00 by end-October. Nomura added that investor attention will also be on upcoming comments from Bank of Japan officials — including policy board member Junko Nakagawa, who is speaking on Thursday this week (Japan time) — for signals on whether the BOJ could lift rates before year-end, which would add to yen strength. This article was written by Eamonn Sheridan at investinglive.com.

Hedge funds cut their bullish bets on crude oil to the lowest level in nearly 17 years, as the fading risk of fresh sanctions on Russian crude shifted focus back to oversupply concerns.CFTC data, reported via Bloomberg (gated) showed money managers’ net-long position in West Texas Intermediate futures fell by 19,578 lots to just 29,686 in the week to Tuesday — the smallest since October 2008.With geopolitical tensions easing and several agencies forecasting oil supply to outstrip demand later this year, sentiment turned bearish. The U.S. push for talks to end the war in Ukraine further reduced expectations of new sanctions on Russian crude, despite little real progress toward peace. This article was written by Eamonn Sheridan at investinglive.com.

The People's Bank of China (PBOC), China's central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a "band," around a central reference rate, or "midpoint." It's currently at +/- 2%.The previous close was 7.1666The rate at 7.1161 is the strongest, for CNY, since November 6 last year. PBOC injected 288.4bn yuan via 7-day reverse repos at 1.40%266.5bn yuan mature todaynet 21.9bn yuan injection This article was written by Eamonn Sheridan at investinglive.com.

Pantheon Macroeconomics said Powell’s Friday remarks mark a clear change in tone from the Fed’s July minutes, which had stressed upside inflation risks. Powell now sees the “balance of risks” shifting, with weaker labor data the catalyst. July’s jobs report showed payroll growth averaging just 35k over three months, down sharply from 168k in 2024.Powell acknowledged tariffs remain a key inflation concern, but argued that softening labor markets limit workers’ wage bargaining power, reducing the risk of tariff-driven inflation becoming entrenched.Pantheon expects hiring weakness to push unemployment above the Fed’s 4.5% year-end forecast, reaching closer to 4.75% by late 2025. It sees tariff-driven inflation largely contained to goods and projects the Fed will cut rates by 25bp in September, November, and December — more easing than markets currently price in.---Earlier:investingLive Americas FX news wrap 22 Aug: Markets cheer on Powell tilt (for now)Goldman Sachs - Powell warns of rising job market risks as GDP growth slowsFed’s Musalem: More data needed before deciding on September rate cut This article was written by Eamonn Sheridan at investinglive.com.

Italy’s Deputy PM Antonio Tajani urged the ECB to cut rates further and consider new QE to help European industry. He also called for easier SME credit and warned the euro’s strength against the dollar is undermining competitiveness.Quite the dove!--Italy’s Deputy Prime Minister and Foreign Minister Antonio Tajani said the ECB should take a more active role in supporting European industry, beyond targeted aid. He pointed to the euro’s strength against the dollar as a key drag on competitiveness and argued that with inflation steady at 2%, there’s scope to cut rates further — from 2% to 1.5%, 1%, or even zero.Tajani also suggested reviving a form of quantitative easing, with the ECB purchasing government bonds as it did during the Covid crisis. In addition, he proposed easing access to credit for small and medium-sized enterprises by temporarily raising the “SME Supporting Factor” threshold from €2.5 million to €5 million via a fast-track procedure.- The European Central Bank next meet on September 11 and an 'on hold' decision is widely expected. Earlier:Reuters cite five sources as saying the ECB may begin cutting rates again later in 2025ECB’s Kazaks: Rates in ‘good place’ as officials shift focus to monitoring economyVon der Leyen: EU–US trade pact for averting escalation, easing risks for euro, exportersECB's Lagarde: Eurozone jobs resilient as inflation falls with little cost to employmentICYMI - ECB’s Nagel: ‘High bar’ for further rate cuts with eurozone in equilibrium This article was written by Eamonn Sheridan at investinglive.com.

Germany's Bundesbank President (and European Central Bank Governing Council member) Nagel said the ECB faces a “high bar” for another rate cut, with inflation at target and policy already eased. He expects rates to stay on hold in September, downplaying German weakness while stressing the importance of central bank independence.-Bundesbank President Joachim Nagel said it would take a major shift in the economic outlook for the European Central Bank to cut rates again. In an interview with Bloomberg TV at the Fed’s Jackson Hole symposium, he said the euro zone is currently in “equilibrium,” with both inflation and policy rates at 2%, and he sees little justification for further easing after eight quarter-point cuts.Nagel’s remarks reinforce expectations that the Governing Council will hold steady again in September, after leaving rates unchanged in July. He downplayed a sharp drop in German GDP in Q2, noting that while 2025 may mark a third recession in as many years, growth should return in 2026 as public spending rises.He also stressed the importance of central bank independence, calling it “the DNA of good monetary policy,” as questions grow around political pressure on the U.S. Federal Reserve. This article was written by Eamonn Sheridan at investinglive.com.

Speaking on Saturday, Lagarde hailed Europe’s labor market for withstanding inflation and aggressive rate hikes, with jobs up 4.1% since 2021. She said disinflation has come at “remarkably low cost” to employment, though warned the unusual mix of supportive forces may not last.-European Central Bank President Christine Lagarde said Europe’s labor market has held up far better than expected despite soaring inflation and steep interest-rate hikes in recent years. Speaking at the Fed’s Jackson Hole symposium, she noted that employment grew by 4.1% between late 2021 and mid-2025 — almost matching GDP growth and roughly double what economic models would have predicted.Lagarde credited both global and domestic factors: easing supply constraints, falling energy costs, fiscal support, delayed wage adjustments, and changes in working hours and labor supply. She argued that this resilience allowed inflation to fall back sharply “at a remarkably low cost” to jobs.With inflation projected to settle at 2% by 2027, policymakers have paused after eight rate cuts, holding the deposit rate at 2% in July. Bundesbank head Joachim Nagel recently said the bar for more action is “high.” Lagarde avoided giving signals on the next rate move, instead cautioning that the unusual mix of forces that preserved jobs may not last, especially as demographics and labor hoarding weigh on productivity — even as technology and AI could offset those pressures. Earlier:Reuters cite five sources as saying the ECB may begin cutting rates again later in 2025ECB’s Kazaks: Rates in ‘good place’ as officials shift focus to monitoring economy This article was written by Eamonn Sheridan at investinglive.com.

EU chief von der Leyen defended the bloc’s trade pact with Washington as “strong, if not perfect,” saying it prevents a damaging transatlantic trade war. She highlighted that Europe’s single 15% tariff rate gives exporters relatively favourable U.S. access, even as Brussels pushes for further cuts.-European Commission President Ursula von der Leyen defended the EU’s recent trade deal with the United States, saying it provides stability and prevents a damaging trade war. Writing in Germany’s Frankfurter Allgemeine Zeitung, she argued that a confrontation with Washington would have only benefitted Russia and China, while harming European workers, consumers, and industry.Von der Leyen acknowledged the pact isn’t perfect but said its 15% “all inclusive” tariff structure offers European firms better market access than what other U.S. partners face. The agreement, struck with President Trump in Scotland last month, has faced criticism within Europe from lawmakers and industry groups, though both sides have begun steps to formalize it.The deal includes reductions in U.S. tariffs on European cars and may open the way for discounts on steel and aluminum. EU officials still want cuts on wine and spirits, which were left out. German Chancellor Friedrich Merz also backed the accord, noting that while tariffs will weigh on Germany’s economy, the outcome is preferable to a full-blown trade war. This article was written by Eamonn Sheridan at investinglive.com.

Latvian central bank governor, and therefore a Governing Council member of the European Central Bank, Martin Kazaks said policy is now in a “good place,” with rates on hold and inflation at target. He argued another cut isn’t needed, as growth risks from tariffs and Chinese imports are balanced by signs of manufacturing recovery and cooling wages.-European Central Bank Governing Council member Martins Kazaks said the ECB has entered a phase where policymakers can stand back and observe the economy, rather than needing to steer it more aggressively. With inflation at the 2% target and no major changes since June’s projections, he argued there’s no need for further immediate rate cuts.The ECB ended its year-long easing cycle in July after eight reductions, leaving the deposit rate at 2%. Officials have since signalled they are likely to hold again in September. Kazaks noted that while tariffs of 15% on EU exports to the U.S. will drag on growth and cheap Chinese goods pose risks, business surveys show signs of a manufacturing recovery and wages are slowing as expected — supporting confidence that inflation will remain at target.He added that inflation will likely undershoot early next year before rebounding, consistent with ECB forecasts that see it dipping to 1.6% in 2026 before returning to 2% in 2027. Traders’ expectations for no further cuts this year align with this outlook. Kazaks downplayed the impact of an additional 25bp cut, saying it would be more symbolic “insurance” than a meaningful policy shift.-Earlier:Reuters cite five sources as saying the ECB may begin cutting rates again later in 2025European Central Bank next meet on September 11 This article was written by Eamonn Sheridan at investinglive.com.

BOE Governor Bailey warned the UK faces an “acute challenge” to boost growth as weak labor participation and poor productivity weigh on potential output. With the economy’s “speed limit” lowered to just over 1%, he said low potential growth leaves Britain prone to inflation and complicates monetary policy.--Bank of England Governor Andrew Bailey said the UK faces an “acute challenge” in raising its long-term growth potential due to weak labor force participation. Speaking at the Fed’s Jackson Hole symposium, he noted that unemployment is not the issue, but rather the drop in people willing or able to work. Unless participation rises, productivity growth will need to carry more of the burden.Bailey described the situation as “a pretty sad story for the UK,” pointing to the combination of weak productivity and declining participation since the pandemic. The BOE has cut its estimate of the UK’s potential growth rate to just above 1%, a level that leaves the economy more vulnerable to inflation. That challenge was evident in the Bank’s recent rate cut to 4%, where it still flagged inflation risks.He added that officials had expected rising unemployment after Covid, but instead saw labor supply shrink, a dynamic that fuelled inflation persistence and kept policy tight for longer. While labor demand is now starting to fall, Bailey warned the growth outlook remains constrained. This article was written by Eamonn Sheridan at investinglive.com.

Ueda flags tight labour market as structural, reinforcing BOJ’s inflation challenge and keeping pressure on yen bears.-Bank of Japan Governor Kazuo Ueda said Japan could ease its chronic labor shortage by increasing full-time employment opportunities for women and expanding the role of foreign workers. Speaking at the Federal Reserve’s Jackson Hole symposium, he noted that only about half of Japanese women are regular employees compared with 80% of men, and childcare support would need to expand to narrow that gap.Foreign workers make up just 3% of Japan’s labor force but contributed more than half of total labor force growth between 2023 and 2024, Ueda said, adding that further increases would require broad policy debate.He stressed that Japan’s shrinking, aging population has long pressured the economy, with nearly 30% of people aged 65 or older. While higher participation among women and seniors has helped offset demographic decline, Ueda said the room for further gains is limited. He warned that, absent a major economic downturn, Japan’s labor market will remain tight and continue pushing wages higher—one factor behind persistent inflation.-Recent data from Japan shows:Japan’s unemployment rate remained at 2.5% for a fourth consecutive month in June, 2.5% is the average over the past three yearsJapan’s consumer inflation stayed well above the BOJ’s 2% target even as price growth moderated, supporting market speculation that another rate hike may come this year This article was written by Eamonn Sheridan at investinglive.com.

Euro steady as ECB seen holding in September; renewed rate-cut talk hinges on growth data and tariff drag later this year.-The European Central Bank is expected to keep rates unchanged in September, but officials may revisit the possibility of further cuts later in the year if economic conditions deteriorate, sources told Reuters.Christine Lagarde had signaled in July that the ECB was comfortable holding its key rate at 2%, effectively ending a year of rate cuts. Recent data show the euro zone economy is holding up better than expected, with inflation steady at the 2% target.U.S. tariffs on EU imports, set at 15% by the Trump administration, aligned with ECB expectations and avoided worst-case scenarios, reducing the case for an immediate cut. Still, the ECB’s forecasts assume another cut at some stage, and discussions could pick up again at the October and December meetings—especially if U.S. tariffs hit exports or the war in Ukraine drags on.While some see a chance of cuts as early as spring 2026, investors have turned more upbeat on the euro zone after summer surveys showed stronger business activity. But policymakers caution this may be temporary, with U.S. buyers front-loading orders to dodge tariffs.***The Bank next meet on September 11: This article was written by Eamonn Sheridan at investinglive.com.

It's a light data calendar to open the new week. While we have New Zealand data the focus for Asia will be conirnued digestion of Powell's remarks at Jackson Hole on Friday that sent 'risk' higher:investingLive Americas FX news wrap 22 Aug: Markets cheer on Powell tilt (for now) This article was written by Eamonn Sheridan at investinglive.com.