Last night, Federal Reserve Chairman Powell made an important speech. Let me interpret it for you and see what it means to us.
Powell first mentioned the decline in inflation, saying that we are currently in an environment of declining inflation, which means that the Fed is now satisfied with the progress of inflation returning to 2%. Therefore, bonds rose on the news, yields fell, and at the same time the US dollar fell slightly, both of which are bullish for gold, and gold rose. Powell's next statement is more important. He mentioned the job market and emphasized that the Fed has a dual mission. In fact, in addition to Powell, the president of the Chicago Fed also mentioned the dual mission that night, namely stable prices and full employment. The Fed seems to be starting to shift its focus to the employment mission, and if there is an unexpected deterioration in the job market, it may prompt them to take action. So last night during Powell's speech, the JOLTS employment report that exceeded expectations was released, causing bond prices to fall slightly, bond yields to rise slightly, and the US dollar also lost its downward momentum and began to rise, which in turn suppressed gold and virtual currencies.
So what does this mean to us? It means that Friday's non-farm report will be extremely important, with market expectations of around 200,000, and the market will pay close attention to the results.
At present, the market still believes that there may be a rate cut in September, but I still disagree. In short, we must pay close attention to the non-agricultural data on Friday, which will be no less important than the CPI next week.
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