{"id":24929,"date":"2025-08-22T07:30:00","date_gmt":"2025-08-22T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=24929"},"modified":"2025-08-21T11:31:56","modified_gmt":"2025-08-21T15:31:56","slug":"get-ready-for-a-jackson-hole-surprise","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/get-ready-for-a-jackson-hole-surprise\/","title":{"rendered":"Get Ready for a Jackson Hole Surprise"},"content":{"rendered":"

Expectations are about to change.<\/p>\n

At the moment, the futures market is pricing in an 80% chance the FOMC will cut its Fed Funds rate by 25 basis points following its meeting on September 17.<\/p>\n

Most folks expect Jerome Powell will hint towards that possibility during his speech in Jackson Hole today.<\/p>\n

But, the setup in the dollar argues differently.<\/p>\n

Let me explain…<\/p>\n

The level of interest rates is one of the many variables determining the price of one currency versus another. In theory, the higher the interest rate, the higher the currency – and vice versa.<\/p>\n

After all, money flows to where it is treated best. So, if the United States offers a higher rate of interest than the European Union, money will flow out of Europe (and out of the Euro) and flow into the United States (and into the dollar).<\/p>\n

In reality, it is the expectation of interest rates that determines the direction of money flow.<\/p>\n

The financial market is a “discounting mechanism.” Money moves based on what we expect to happen. So, the rise or fall in the dollar happens in advance of the decline or increase in interest rates.<\/p>\n

With that in mind, look at this chart of the US Dollar Index …<\/p>\n\n

\"\"<\/figure>\n\n

The dollar peaked in January. It has been in a steady decline ever since then.<\/p>\n

Readers may recall that in January, the futures market began pricing in a 100 basis-point decline in the Fed Funds rate this year. While the rate hasn’t come down at all, expectations of a rate cut have crushed the value of the dollar.<\/p>\n

The dollar index fell 12% between January and July.<\/p>\n

Notice, though, what has happened recently…<\/p>\n

After bottoming at 97 in early July, the buck has established a new uptrend. It has made a series of higher highs and higher lows. It is trading above all of its various moving averages. And, those moving averages are now coiled together – building energy to fuel the next big move.<\/p>\n

To me, this looks like a very bullish chart setup.<\/p>\n

Admittedly, we turned bullish on the buck several weeks ago<\/a>. So far, the dollar index has only moved slightly higher.<\/p>\n

But, that move higher has been despite rising expectations that the Fed will lower interest rates.<\/p>\n

That’s not supposed to happen. Somebody is wrong here.<\/p>\n

Either the currency traders are wrong and the bullish setup in the dollar will reverse, or, the folks betting on a drop in interest rates are wrong, and the dollar is set to explode higher.<\/p>\n

It can go either way. But, my guess – based on the bullish setup in the dollar – is Mr. Powell is going to be a bit more hawkish than expected during his presentation in Jackson Hole today.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n\n

\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The buck looks set to go higher\u2026 <\/p>\n","protected":false},"author":100,"featured_media":0,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-24929","post","type-post","status-publish","format-standard","hentry","category-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24929","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/100"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=24929"}],"version-history":[{"count":2,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24929\/revisions"}],"predecessor-version":[{"id":24938,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24929\/revisions\/24938"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=24929"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=24929"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=24929"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=24929"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=24929"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=24929"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=24929"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}