Tomorrow morning, Powell's speech will primarily focus on how he dampens the market's fervent expectations for interest rate cuts!
Currently, the market is betting on five rate cuts next year, which is clearly too fast; the Federal Reserve will not respond to this at all. Powell is likely to adopt a hawkish and cautious stance, acknowledging that inflation data has improved somewhat, but he will emphasize that it is still too early to declare victory, and the battle against inflation is not over yet. He will reiterate that policy depends on subsequent data and that interest rates need to remain at restrictive levels for a longer time. This is a short-term negative for risk assets; the dollar may rebound, while U.S. stocks, cryptocurrencies, and gold will face pressure. If Powell unexpectedly adopts a dovish tone and clearly discusses the conditions for rate cuts, it would be a significant positive, but the likelihood is extremely low. Traders need to closely watch whether he describes inflation as 'progressing well' or 'still needing effort', as well as whether he insists that 'policy is sufficiently restrictive', which is a key statement. My personal view is that one should not hold bullish fantasies about this speech; the market needs to return to rationality and be prepared for volatility, with key support levels serving as the basis for operations.