Comments yesterday by Fed Chair Jerome Powell suggesting that US inflation is now established within a downwards trend sent major equity indices higher with several making record high daily closes yesterday.

1. In public remarks yesterday, Fed Chair Jerome Powell stated that inflation in the USA is clearly on a downwards trend, and these remarks were taken by the market as having a dovish intent portending an earlier rate cut. The CME FedWatch tool now shows a small increase in the numbers expecting a rate cut at the Fed’s September meeting, to 65%. This sentiment pushed stock markets higher, with both the NASDAQ 100 and the S&P 500 making record high closes, the NASDAQ above 20,000 and the S&P 500 above 5,500 each for the first time ever. Asian equities have followed the US higher during today’s Tokyo session, with the Nikkei 225 Index only about 1% below its all-time high. Trend traders will be interested to be long of major equity indices now.
2. Markets are awaiting the release later today of the Fed’s FOMC Meeting Minutes, which will be examined for clues as to the thinking of Fed members at its previous meeting.
3. The Japanese Yen is continuing to weaken, with the USD/JPY currency pair trading at a new 38-year high of ¥161.87 towards the end of the Tokyo sessiom. Trend traders will be interested in being long of this pair, and/or in certain Yen crosses. Vanguard sees ¥170 as a possible target if the Bank of Japan fails to boost yields soon.
4. In the Forex market, the Australian Dollar is the strongest major currency since the Tokyo open, while the Japanese Yen is the weakest. This make sense as sentiment shift to a more risk-on emphasis, as the Aussie is a key risk-on currency. It is also worth noting that the US Dollar remains within a valid long-term bullish trend.
5. Yesterday’s Eurozone Core CPI flash estimate was just a fraction higher than expected, with the Core CPI Flash Estimate staying at an annualized rate of 2.9% when it had been expected to drop to 2.8%.
6. Yesterday’s US JOLTS Job Openings data came in slightly higher than expected.
7. There will be releases today of the following potentially high-impact data in the USA:
   • ADP Non-Farm Employment Change
   • ISM Services PMI
   • Unemployment Claims

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