Global markets are intently focused on the upcoming release of the Federal Reserve’s preferred inflation gauge, with hopes riding on a soft landing for the U.S. economy and the prospect of lower interest rates. The anticipation of a Fed rate cut continues to dominate market sentiment, following data that suggests the central bank has successfully curbed inflation without triggering a recession. U.S. output in the second quarter was revised upwards, showing stronger-than-expected growth, primarily driven by robust consumer spending that offset weaker performance in other sectors.
The U.S. economy appears to be transitioning from a phase of exceptional strength to one of continued resilience. Although economic data is expected to show further signs of weakening, the key question remains: how much will inflation ease alongside this slowdown? The Dollar Spot Index was relatively stable, though gains earlier in the week indicate that it is set to end higher for the first time in five weeks.
Beyond the core Personal Consumption Expenditures (PCE) data set to be released later today, next week’s U.S. employment report is poised to be a major focal point for financial markets. The nonfarm payrolls figures, scheduled for September 6, will be closely analyzed for signals on whether the Fed will proceed with a rate cut in September. This follows Fed Chair Jerome Powell’s recent remarks at Jackson Hole, where he signaled a potential easing of monetary policy. The dovish tone from Jackson Hole continues to reverberate across markets, while attention now shifts to employment data to gauge whether the economy is on track for a soft landing.
In the commodities sector, gold remains near its record high, buoyed by market uncertainty, while oil prices have stabilized after a sharp rise on Thursday. The increase in oil was driven by positive U.S. economic data and escalating supply disruptions in Libya, which have further tightened the market.