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Collinson FX: Aug 26: Markets and data make the running after Fed Reserve's tardiness

by Collinson FX 26 Aug 06:30 BST 26 August 2025
Callisto (NZL/SUI) - Start 2025 Rolex Fastnet Race - Cowes - July 25, 2025 © Richard Gladwell - Sail-World.com/nz

Equity markets took profit, following the big gains booked Friday, triggered by admissions from Fed Chair Powell that rate cuts were due.

Powell has resisted unprecedented pressure from the Trump administration to avoid rate cuts, but markets and data are calling the tune.

Rate cuts will ease the pressure on US markets and stimulate an already warm economy. This week US GDP growth should confirm this. The US Dollar rallied, forcing the EUR back to 1.1650, while the GBP surrendered 1.3500.

The stronger reserve ensured the AUD did not regain 0.6500, while the NZD was steady around 0.5850. Local markets will keenly await the RBA minutes today, ahead of key inflation data, set to be released tomorrow.

About Callisto: The B&C 42 yacht, representing the Royal New Zealand Yacht Squadron (RNZYS). Was part of the revived Admiral’s Cup campaign in 2025, sailing alongside another RNZYS boat named Caro. In the AC2 (40fter) fleet at the Admirals' Cup, Callisto performed strongly taking line honours in its division from Jolt?6, although it dropped to fourth on corrected time (handicap). Callisto's crew included America’s Cup legend Dean Barker.

Varuna IV/6 - Start 2025 Rolex Fastnet Race - Cowes - July 25, 2025 - photo © Richard Gladwell - Sail-World.com/nz
Varuna IV/6 - Start 2025 Rolex Fastnet Race - Cowes - July 25, 2025 - photo © Richard Gladwell - Sail-World.com/nz

Aug 25: USD tanks after Fed Speech

US Federal Reserve Chairman Powell set markets on fire Friday, finally accepting the need to cut rates, buckling under enormous pressure from President Trump.

The speech was the keynote address to the Jackson Hole Central Banker Symposium and seemingly accepted economic conditions now demand rate cuts.

It will not save his job, as ‘too late’ lives up to the Trump nickname, with his approach probably based on political ideology.

The US Dollar tanked, with the EUR busting through 1.1700, while the GBP topped 1.3500.

The falling reserve allowed some recovery of the commodity currencies, with the AUD heading back towards 0.6500, while the NZD regained 0.5850. This coming week will be dominated by global growth and inflation data, with the European lack of growth explaining the stunted inflation. US growth should be strong, while inflation is likely to confirm Powells ‘conversion’.

About Varuna IV/6 (above): Varuna IV, a Ker 56 yacht owned by German sailor Jens Kellinghusen, competed in the 2025 Rolex Fastnet Race under the name Varuna 6. Designed by Jason Ker, the Ker 56 is renowned for its high-performance offshore racing capabilities. In the 2025 race, Varuna 6 was a strong contender in the IRC Zero class, closely trailing the Australian yacht Whisper. The crew included experienced sailors such as Volvo Ocean Race veteran Roberto 'Chuny' Bermudez de Castro. Varuna 6's performance was particularly notable in the downwind leg after rounding the Fastnet Rock, leveraging its design strengths to close the gap on competitors - rolexfastnetrace.com.

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