During the Q&A session, Powell said that he realized that Fed faced two-sided risks. If the Fed starts cutting rates too early and too aggressive, the central bank would undermine the progress on inflation. In case the Fed cuts rates too late, it would put too much pressure on the economy.
Talking about the next move, Powell noted that a rate cut was more likely than a rate hike.
U.S. Dollar Index gained ground as traders reacted to Powell’s comments. From a big picture point of view, U.S. Dollar Index is trying to rebound after the pullback from June highs.
Gold moved away from session highs as traders focused on the rebound of the U.S. dollar. It should be noted that potential rate cuts are bullish for gold markets, so it remains to be seen whether gold’s pullback would be sustainable.
SP500 settled near the 5590 level as traders remained bullish. Powell’s testimony did not contain any surprises, which is good news for stocks. As Fed is slowly moving towards the start of the rate cut cycle, stock traders may stay focused on the potential of the AI technology.
For a look at all of today’s economic events, check out our economic calendar.
