Over the past two weeks or so, financial markets have been adjusting ahead of Chairman Powell’s speech in Jackson Hole.

Stocks were down, U.S. interest rates were up, and the dollar was relatively steady. The expectation was that Powell would take a hawkish stance in Jackson Hole.
This was only an expectation, but Lagarde and many other top central bankers tried to protect Chairman Powell, saying that the independence of the central bank is more important than anything else.

Prior to this, many participants were surprised by the FOMC meeting summary, which was more hawkish than they had expected.
After the release of the minutes, the dollar rose from around 147.00 yen to around 147.45 yen, and short-covering continued to the 147.64 level as it failed to attack lower.
It was important to note that “the majority of members said that inflation risks outweigh employment risks.”

However, the speech’s statement of acceptance of a rate cut by the expression “proceed with caution” led to a weaker dollar, higher U.S. Treasuries, and higher stocks.
The NY Dow had been repeatedly falling back at the ceiling, but it broke through last night, so there is no doubt that the market will move upward from now on.
I think this trend will continue at least until the FOMC meeting in September.

Looking at Europe, the war in Ukraine does not seem to be over, and European countries are burdened with a military burden,
The dollar is not strong enough to be bought significantly, but I think it will be to the upside due to the weak dollar and to the downside for the dollar and the yen.

In the end, the whole world will be dependent on the strength of the U.S. economy, but as long as inflation does not stop as tariffs reduce purchasing power, the music is likely to keep on playing.