Market Summary and Key Outlook (as of August 26, 2025)
Global Financial Condition Highlights
- President Trump’s firing of Fed Governor Lisa Cook and renewed tariff threats exacerbate USD weakness and policy uncertainty.
- Fed Chair Powell’s Jackson Hole remarks leaned dovish—he signalled openness to a September rate cut—prompting markets to reprice Fed easing.
- Geopolitical developments around the Russia-Ukraine cease-fire remain a critical wildcard for safe-havens and risk assets alike.
Currencies & Forex Markets
- NZD: Bearish
RBNZ cut by 25 bps (two votes for 50 bps) and adopted ultra-dovish guidance, setting the stage for further easing. - EUR/NZD: Bullish
Continues to rally on NZD softness; reflects broad Kiwi vulnerability. - EUR/GBP: Bullish
UK CPI flash pointed to stagflation dynamics, while daily-chart bullish engulfing supports upside toward ~0.8760. - USD/JPY: Bearish
Dovish Powell comments and US policy meddling favour JPY strength; Goldman Sachs targets ~142. - EUR/USD: Mildly Bullish
Broad USD downtrend post-Fed and Fed-governance concerns underpin EUR gains. - GBP/USD: Bearish
Stagflationary UK data and USD-weakness-driven flows weigh on the pound.
Major Asset & Equity Outlooks
- Gold: Bullish
A dovish Fed, Trump’s growing grip on the Fed, and tariff-risk premium drive momentum above $3,400, with a medium-term target near $3,500 and GS’s mid-2026 $4,000 forecast. - US Equities (S&P 500): Cautious
A Fed-easing tailwind may be offset by signs of a slowing labor market and intensifying policy risk—position for volatility. - Bitcoin & Crypto: Event-Driven Volatility
Expect sharp swings around Fed commentary and Trump policy announcements.
Summary
- The path of least resistance remains USD-weakness and gold-strength.
- Preferred plays: long gold, short USD vs. EUR and JPY, and selective long EUR/GBP and EUR/NZD.
- Monitor Russia-Ukraine talks and any hawkish pivots from Powell for short-term inflection points.
Overall: A dovish Fed pivot combined with US policy interventions point to continued USD underperformance, a bullish gold regime, and selective FX opportunities in EUR and JPY.