In the US session, we had stronger May JOLTS jobs and FED’s Powell, but FED rate odds remain the same as we head toward the close. JOLTS job openings jumped higher but the increase came mostly from government jobs, while Jerome Powell’s comments gave the USD a wobble, but it remains unchanged after all.

The European session was quite today, despite the Eurozone ECB inflation, as markets were waiting for Lagarde and Powell to appear at Sintra in Portugal. Several ECB officials emphasized the need to gather more evidence before deciding on any potential rate cuts in September. The primary focus was on the Eurozone inflation data, revealing a headline figure dropping to 2.5% year-on-year, while the core inflation measure stayed steady at 2.9% year-on-year.

Fed Chairman Powell’s opening remarks have contributed to a decline in interest rates, with the 10-year yield currently down by 6.1 basis points. Consequently, the US dollar has depreciated. The EUR/USD reached a low of 1.07462, while the USD/JPY dropped and tested the 50-day SMA (yellow) near 161.27 before bouncing back. This movement underscores the market’s sensitivity to Powell’s comments and the ongoing volatility in currency pairs. The broader implications for the dollar and interest rates remain to be seen as traders digest the Fed’s stance.

Comments from FED’s Chairman Jerome Powell at Sintra

• The labor market remains robust, though a continued rebalancing is evident.
• More progress on inflation is necessary.
• Recent data indicates we’re on a better trajectory regarding wages.
• We aim to see more data similar to what we’ve been observing.
• The latest PCE at 2.6% shows “really significant progress.”
• “We just want to ensure that the levels we’re seeing are a true reflection of underlying inflation.”
• We have the flexibility to take our time and get this right.
• Acting prematurely could undermine the progress we’ve made on inflation.
• Risks are now becoming much more balanced.