Powell's Anticipated Speech on Friday: Don't Expect Too Much from a Rate Cut in September, Better to Hold Back This Week
The market is waiting for Powell's speech this Friday, but don’t expect any dovish surprises. The Federal Reserve Chairman has always been a "data-driven" person and won't easily be swayed by political pressure. Currently, the chances of a rate cut in September are basically slim, and spot traders should refrain from making unnecessary moves this week.
What might Powell say?
The least likely scenario is a direct denial of a rate cut—this doesn't align with his technocratic persona. More likely is a Tai Chi approach: neither confirming nor outright denying a rate cut, but emphasizing that inflation has not yet met the target (currently 2.7% is still far from 2%), while also refuting Trump's claims of "poor employment."
Why should the market be cautious?
Powell is usually straightforward and historically hasn't provided dovish signals. This time, it’s highly probable that his stance will lean hawkish or neutral. If any rumors leak out beforehand, the market might react with a direct drop. So, this week, the recommendation is to just watch the show and resist the urge to act. If you really must trade, wait until after the speech.
(Market risks exist; decisions should be made cautiously)