Powell’s dovish comments support indices’ growth. Silver rises after gold

Speaking at the Fed’s annual symposium at Jackson Hole on Friday, Fed Chairman Jerome Powell recognized recent progress on inflation and said that “the time has come for policy adjustments.” The chairman noted that the US labor market is cooling rapidly following the release of a softer July employment report and downward revisions to the jobs data. Powell also noted that the FOMC has further strengthened its confidence that inflation is slowing to the 2% target, suggesting it is time to adjust monetary policy toward less tight conditions. In addition, Atlanta Fed President Bostic said late last week that more than one Fed interest rate cut may be needed before the end of the year.

The Canadian dollar rose to 1.35 per US dollar in August, the strongest in five months, as new evidence of the Fed’s dovish stance pressured the US dollar. Fed Chairman Jerome Powell said in a speech that a weak labor market and slowing US inflation require a quick response from the US Central Bank in the form of a less tight monetary policy, which boosted G10 currencies against the US dollar. The urgency in Powell’s rhetoric was enough to offset dovish expectations for the Bank of Canada, which has already begun a cycle of rate cuts to address growth and a moderate labor market domestically. The unemployment rate is holding at 6.4%, the highest in two years, with net employment falling and the lowest labor force participation rate since 1998.

Silver (XAG/USD) traded above $29.5 per ounce in late August, near its highest levels in five weeks, as Federal Reserve Chairman Jerome Powell reinforced hopes of an interest rate cut in September. The US Central Bank is expected to begin easing policy in September, but the market remains divided over the size of the first-rate cut. Overall, traders are pricing in about 100 basis points of rate cuts at the Fed’s three remaining meetings this year. Precious metals also received support from increased safe-haven flows after Hezbollah launched rocket attacks on Israel over the weekend.

WTI crude oil prices rose to around $75.4 a barrel on Monday, rising for a third straight session, driven by concerns over supply risks amid escalating fears of a broader conflict in the Middle East.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 1.32%, China’s FTSE China A50 (CHA50) added 0.22%, Hong Kong’s Hang Seng (HK50) gained 0.24% over 5 trading days, and Australia’s ASX 200 (AU200) posted a positive 0.66%.

The Australian dollar traded near $0.68, moving towards the strongest levels this year, as the Reserve Bank of Australia’s (RBA) hawkish monetary policy outlook contrasted with dovish signals from the Federal Reserve. Minutes from the RBA’s last meeting showed that the money rate will remain stable for an extended period. RBA Governor Michele Bullock also recently said that despite signs of weakening inflation, it is “premature” to consider cutting interest rates.

In New Zealand, the Reserve Bank (RBNZ) began its easing cycle with a rate cut this month and has announced an upcoming cut. Markets expect aggressive easing before the end of the year, with traders estimating additional quarter-point rate cuts in October and November.

Pavel Durov, the billionaire co-founder and CEO of messaging app Telegram, was arrested at the Bourget airport outside of Paris Saturday evening. According to the report, Durov, 39, was traveling aboard his private jet after arriving from Azerbaijan, which triggered a French search warrant issued by the OFMIN of the French judicial police due to his inclusion in a wanted persons file (FPR). Durov was detained by the National Anti-Fraud Office (ONAF) over the alleged facilitation of various crimes, including terrorism, narcotics trafficking, and fraud. He faces up to 20 years in prison if convicted.

USD Index 100.68 −0.83 (−0.82%)