Powell hints at potential rate cuts

The U.S. Federal Reserve Chair Jerome Powell delivered remarks during a press conference in Washington on Wednesday, sparking investor optimism about potential rate cuts. His comments helped drive positive market sentiments globally. Powell reinforced expectations that rate cuts could be on the horizon in the U.S. He mentioned that the U.S. economy is on a “disinflationary path,” which eased the dollar and caused Treasury yields to drop. However, he emphasized that policymakers will need more data before deciding on rate cuts. The next few inflation readings will be crucial in determining U.S. rates by the end of the year. Minutes from the Fed’s June meeting, due later today, may provide more insights into the central bank’s thoughts on rate adjustments. Traders are currently anticipating up to two rate cuts from the Fed this year. In Europe, the market focus remains on the fallout of the French election. Opponents of France’s National Rally are rallying to block the far-right party in the upcoming run-off election.

Powell hints at future adjustments

The euro was steady at $1.074475, and futures suggested that the pan-European STOXX 600 index could recover from its recent two-month low. The European Central Bank (ECB) appears to be in no rush to lower borrowing costs further, especially after last month’s rate cuts. Data released on Tuesday indicated that the crucial services component in Eurozone inflation remains stubbornly high. ECB representatives, including Christine Lagarde and Philip Lane, are scheduled to speak in Portugal and may offer market-moving insights on future rate expectations. Traders currently anticipate 43 basis points of cuts from the ECB this year. Tesla reported a smaller-than-expected 5% drop in vehicle deliveries for the second quarter, thanks to price cuts and incentives that helped counter cooling demand. However, electric vehicle makers, including Tesla, face a challenging road ahead. Key economic events to watch on Wednesday include the release of June PMI data for France, Germany, the UK, and the Eurozone. Speeches from the Fed’s John Williams and ECB’s Christine Lagarde and Philip Lane at the ECB forum in Portugal could also influence market movements.