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25/08/2025 - 07:35 UTCThe U.S. dollar attempted to stabilize early on Monday after dropping nearly 1% on Friday, following Federal Reserve Chair Jerome Powell’s dovish remarks that triggered a sharp sell-off late last week. Powell, speaking at the Fed’s annual Jackson Hole symposium, signaled that a rate cut could come as early as the central bank’s September 17 meeting. “Downside risks to employment are rising,” Powell warned. “And if those risks materialize, they can do so quickly.”
Markets are now pricing in an 87% chance of a quarter-point cut next month, according to the CME Fed Watch Tool. Expectations for Fed easing had already risen earlier this month after weak payrolls data, though they were tempered by hotter-than-anticipated producer prices and robust business activity surveys. Powell’s Jackson Hole remarks reignited dovish bets.
The dollar has also been under pressure from political headwinds as President Donald Trump has escalated his criticism of Powell and other Fed officials, raising concerns about central bank independence. Last week, Trump targeted Fed Governor Lisa Cook over mortgage holdings in Michigan and Georgia, threatening to dismiss her if she refuses to resign. He has also faulted Powell both for delaying rate cuts and for cost overruns tied to renovations at the Federal Reserve building.
Most Asian equities rose on Monday, taking cues from Wall Street’s strong rally after Federal Reserve Chair Jerome Powell signaled a greater openness to cutting interest rates next month. Chinese and Hong Kong markets outperformed, lifted by gains in technology and semiconductor shares as Beijing pressed for greater self-reliance in the sector. China’s SZSE climbed 1.70% to its highest level since mid-2022 as of 06:00 GMT on iforex platform, while the China SSE gained almost 1% at the same time and approached a decade-high. The gains extended August’s strong momentum, fueled by improving U.S.-China trade ties, signs of domestic growth stabilization, and optimism in technology and biotech.
U.S. stock index futures were little changed on Sunday evening, pausing after Wall Street’s sharp rebound on Friday when Federal Reserve Chair Jerome Powell signaled the central bank could soon cut interest rates. The focus this week turns squarely to earnings from NVIDIA Corp., widely seen as a bellwether for the artificial intelligence sector. Friday’s rally saw the US 500 climb 1.33%, the US Tech 100 jump 1.38%, and the US 30 gain 1.76% to a new all time high. The move helped erase much of last week’s losses, driven by growing bets on a September rate cut.
Investor attention is now on Nvidia’s second-quarter results, due Wednesday. The company is expected to report another strong performance, underscoring its role as the primary beneficiary of AI infrastructure spending. But analysts warn that Nvidia’s China sales could show further weakness amid U.S. export curbs and tighter Chinese scrutiny on AI chips. Reports last week suggested the company had halted production of its China-specific H20 chip.
Beyond Nvidia, corporate earnings this week include Dell Technologies, Best Buy, Dollar General, and Abercrombie & Fitch. On the macro front, second-quarter U.S. GDP figures will be released, following preliminary data in late July that pointed to solid economic growth.
Bitcoin pulled back on Monday, erasing much of last week’s gains fueled by dovish signals from Federal Reserve Chair Jerome Powell, while Ether hovered near all-time highs. Over the weekend, Bitcoin briefly slid to a six-week low near $111,000 as traders locked in profits.
On Friday, Bitcoin spiked after Powell’s remarks at the Jackson Hole symposium, where he acknowledged rising risks to the U.S. labor market and suggested that “the shifting balance of risks may warrant adjusting our policy stance.” His comments boosted bets on a September rate cut, lifting risk-sensitive assets including cryptocurrencies.
Japan’s Finance Minister Katsunobu Kato said Monday the government will work to create an “appropriate environment” for digital assets, highlighting their potential role in diversified investment portfolios. Kato’s remarks reflect a shift toward broader market adoption, even as regulators seek to balance innovation with investor protection and financial stability.
The euro surged against the U.S. dollar on Friday, with EUR/USD climbing 0.93% on iForex platform, after Federal Reserve Chair Jerome Powell struck a dovish tone at the Jackson Hole symposium.
Powell signaled that policy flexibility remains on the table, acknowledging downside risks in the labor market while warning that inflation risks remain tilted to the upside. “The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said, while adding that tariff-related inflation pressures could be temporary. Markets quickly repriced expectations for the Fed’s September policy decision.
Still, the path ahead hinges on key data releases, including July’s Core PCE Price Index, August CPI, and the August Nonfarm Payrolls report. Strong inflation and labor market readings could delay easing until later in 2025.
Meanwhile, eurozone dynamics remain relatively stable. The European Central Bank (ECB) is widely expected to keep rates unchanged at its next meeting, with market pricing showing a 94% chance of no move. This divergence in policy outlook is helping to support the euro despite weak data at home. Germany’s GDP contracted by 0.3% quarter-over-quarter in Q2, worse than the -0.1% expected, while annual growth slowed from 0.4% to 0.2%. With the ECB holding steady and the Fed leaning toward renewed easing, analysts suggest EUR/USD could extend gains in the weeks ahead.
Gold slipped in early European trading on Monday, pressured by a firmer U.S. dollar following a sharp rebound on Friday. However, optimism over a potential Fed rate cut in September, after Federal Reserve Chair Jerome Powell’s dovish remarks at the Jackson Hole symposium, may cap further declines.
Geopolitical tensions also supported gold prices. Ukrainian President Volodymyr Zelensky vowed to continue defending his country’s freedom in a speech marking Ukraine’s independence day, following Moscow’s claims of attacks on Russian power facilities, including a fire at a nuclear plant in Kursk. Russian Foreign Minister Sergey Lavrov noted that a summit between Putin and Zelensky could occur once the agenda is ready, though no meeting is currently planned.
Fed officials offered mixed signals over the weekend. St. Louis Fed President James Bullard emphasized the need for more data before supporting a rate cut, citing inflation above the 2% target, while Boston Fed President Susan Collins highlighted solid U.S. economic fundamentals but noted potential longer-term tariff impacts on inflation.
Meanwhile, physical gold demand in key Asian markets remained muted last week amid price volatility, though Indian jewelers resumed buying ahead of the upcoming festival season.
Oil prices stabilized on Friday as uncertainty surrounding a potential peace deal between Russia and Ukraine continued to weigh on the market. Both Brent and West Texas Intermediate (WTI) crude posted modest gains for the week, reversing two consecutive weekly losses.
Market attention remains focused on potential diplomatic developments. U.S. President Donald Trump said he will explore whether Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky can work toward ending the war, though Russian Foreign Minister Sergey Lavrov noted no agenda currently exists for a summit.
The conflict escalated this week, with Russia launching air strikes near the EU border and Ukraine targeting a Russian oil refinery and the Unecha pumping station on the Druzhba pipeline. Russian oil supplies to Hungary and Slovakia could be suspended for at least five days. Meanwhile, Estonia signaled willingness to contribute a battalion to a potential Ukrainian peacekeeping operation.
Oil prices were supported by stronger U.S. demand, with crude inventories falling 6 million barrels—well above expectations—and the U.S. rig count dropping to 538, the lowest since mid-July, signaling tighter future supply.
Investors are also monitored the Jackson Hole economic symposium for signs of a Federal Reserve interest rate cut. Fed Chair Jerome Powell suggested a potential rate reduction next month, noting risks to the labor market and inflation. Lower rates could spur economic growth and fuel oil demand, potentially supporting prices.
U.S. stock indexes posted sharp gains on Friday, with the Dow Jones Industrial Average closing at a record high, boosted by renewed hopes for a September interest rate cut and strong gains in technology stocks.
Federal Reserve Chair Jerome Powell, speaking at the Jackson Hole Symposium in Wyoming, suggested the central bank could cut rates as soon as next month. “Downside risks to employment are rising,” Powell said in prepared remarks, adding that the short-term impact of tariffs on inflation was “reasonable.” His comments came amid earlier uncertainty over whether a September rate cut was likely. Following his speech, markets began pricing in two additional cuts by year-end.
Despite his more dovish tone compared to July, Powell remains cautious about inflation and warned that tariffs could sustain price pressures. The yield on the 2-year Treasury fell sharply as markets priced in near-certainty of a September rate cut.
Canada announced it would remove most of its 25% retaliatory tariffs on U.S. goods ahead of the upcoming U.S.-Mexico-Canada agreement review.
In corporate news, Meta Platforms signed a six-year, $10 billion cloud deal with Alphabet’s Google as it ramps up AI initiatives. NVIDIA fell after reports that it paused production of its China-specific H20 AI chip due to regulatory scrutiny. Zoom Video Communications rose on strong second-quarter results and an upgraded full-year forecast. Intel jumped over 5% following confirmation from President Donald Trump that the U.S. government is taking a nearly 10% stake in the chipmaker.
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