Market Pulse: Powell’s Dovish Surprise, Crypto Rallies on Jackson Hole Comments

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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What happened?

Powell surprised markets at Jackson Hole with a dovish tilt, opening the door to a September cut. Crypto rallied off this. He brushed off tariff inflation as temporary, but flagged labour softening as the bigger risk, hence the dovish shift.

A few of the key comments that showed a dovish tilt were:

• Current conditions may warrant interest rate cuts.
• Employment risks are rising.
• The base case is that the tariff's impact on inflation will be short-lived.

Short-Term: Huge relief rally as the market re-prices back in a FED rate cut in September. This was a highly unexpected dovish tilt from Powell.

Market Reaction Since: A bounce in risk assets across the board, with Yields lower (pricing in the cut). Chances are that the market chops but moves higher as there is support from Powell that he's open to cutting Interest Rates in September.

• How To Position: Maintain positioning. We expect upside in the coming months.
• Next Catalysts: Jobless Claims and Core PCE data next Thursday and Friday.

Cryptonary's Take:

The market was extremely cautious going into Powell's Jackson Hole speech; however, Powell surprised with a dovish tilt where he emphasised a weakening labour market, which might mean that there should be an adjustment to policy in the near term - i.e., moving interest rates lower.

Risk assets (Crypto) have bounced aggressively off the back of Powell's comments, and further upside is now also likely in the medium term, with the market now comfortable that Powell can and will cut rates in the near-term.

Looking at BTC, it has bounced from $112,000, and it's now moving into the main horizontal resistance at $116,600. Above $116,600 is bullish for BTC (and the market as a whole).

BTC Chart