Markets:

  • NZD leads, USD lags
  • WTI crude up $1.91 to $74.92
  • US 10-year yields down 6.5 bps to 3.79%
  • Gold up $28 to $2510
  • S&P 500 up 1.1%

Powell's Jackson Hole speech had plenty of hype and often that leads to a let-down but that certainly wasn't the case this time. Most expected him to at least hint at a rate cut but he laid it out explicitly and then layered on a comment saying the Fed "will do everything we can to support a strong labor market."

Also notable was what that speech didn't include and that was a nod to moving gradually or anything along those lines. That means Powell wants to keep his options open around 50 bps either now or later.

In short, he managed to out-dove himself despite a high bar and the market reaction was strong. The US dollar fell hard across the board in a move that sustained itself throughout the day with few pullbacks.

There was some angst about Powell yesterday and that led to USD buying but those moves were wiped out in the initial round of USD moves followed by an extension later.

It was all orderly but I'm going to be carefully watching USD/JPY in Asia-Pac trading at the open. That pair fell nearly 200 pips and finished with the lowest close since January. There's still 270 pips until the intraday squeeze low from August but those left in the carry trade could be feeling the pinch and there could be another rush to the exits.

Have a great weekend.

FX wrap August 23 news ticker