Asian and European equities rose ahead of a much-anticipated speech by Federal Reserve boss Jerome Powell later Friday, as the dollar weakened amid speculation about how big an expected interest rate cut next month could be.
The yen also advanced after the head of Japan’s central bank told lawmakers that officials could hike interest rates again if the economy and inflation perform as expected, weeks after a surprise increase caused turmoil on markets.
While a cut is considered virtually inevitable in September, traders remain edgy in the lead-up to Powell’s speech at the annual symposium of central bankers in Jackson Hole, Wyoming, amid fears he might not be as dovish as hoped.
He had already put markets on alert for a reduction after saying in recent weeks that one could come “as soon as” September and that inflation did not have to hit decision-makers’ two percent target before they moved.
But a massive miss on non-farm payrolls (NFP) for July and other signs that the labor market has softened have sown a seed of worry among some that the US economy was in danger of slipping into recession, even after a string of other data suggesting otherwise. AFP
