Markets Hold Breath Ahead of Powell at Jackson Hole

Good morning, traders. After a turbulent Thursday, markets are trying to steady their nerves as we head into the final trading day of the week. The session yesterday began with a sharp sell-off in U.S. equities, fueled by nerves around inflation and the still-fragile sentiment on Wall Street. But what looked like the start of another leg lower quickly flipped. In the second half of the American session, buyers stepped back in force, turning losses into a late-day rebound. That swift reversal raised hopes of a V-shaped recovery and gave investors something positive to hold onto into Friday.

This morning, European indices are opening cautiously, not exactly charging higher but certainly showing resilience after yesterday’s rollercoaster. American futures are flat to slightly higher, suggesting traders are keeping their powder dry for the main event of the day: Jerome Powell’s speech at the Jackson Hole Symposium. His comments on inflation, interest rates, and the Fed’s independence from political pressure are likely to set the tone for the entire afternoon session.

On the currency front, the U.S. dollar is holding firm, clawing back some of the ground it lost earlier in the week. The pound remains one of the standout performers after its inflation surprise midweek, while the New Zealand dollar is still reeling from the dovish central bank cut. Meanwhile, the yen is steady after an erratic week, and European currencies are moving cautiously ahead of Powell.

So, the picture this Friday morning is one of fragile balance. Indices are trying to recover their composure, the dollar is steady, and traders are waiting for Powell’s words to either confirm the cautious optimism or trigger another wave of selling. After yesterday’s intraday turnaround, today could prove decisive in showing whether the market has the strength to hold its ground, or whether the bear case is ready to take back control. 

Source: https://www.axiory.com/analytics/technical-analysis/markets-hold-breath-ahead-of-powell-at-jackson-hol