Powell "turned the pigeon in an all-round way", and traders argued endlessly about the rate cut in September.

The long-awaited interest rate cut is finally coming! However, the market debate on the scale and path of interest rate cuts is still endless.

Federal Reserve Chairman Powell said last Friday that "the time has come to cut interest rates", which is his clearest signal so far.

"This means in September that 25 basis points and 50 basis points are still an open debate." John Velis, foreign exchange and macro strategist at Bank of New York Mellon, said.

The US employment data for August, which will be released on September 6th, is crucial. Velis said that if the next round of data continues to be lower than expected, "then the interest rate may be cut by 50 basis points".

The shift in interest rate cuts is seen as bad for the dollar.

Analysts believe that no matter what the specific path of interest rate cuts is, the change of interest rate cuts is regarded as unfavorable to the US dollar, making the US dollar a potential arbitrage currency, and traders will borrow low-yielding US dollars to invest in currencies or assets with higher returns.

All eyes of the exchange rate market are gathering on the yen. Due to the depreciation trend of the US dollar, some investors think it is a wise choice to buy currencies such as Japanese yen at this time.

Shoki Omori, chief strategist of Mizuho Securities in Tokyo, said:

"The dollar is rapidly depreciating against all currencies, including the Japanese yen and the Brazilian real-in this case, investors may think that a currency that has depreciated sharply like the Japanese yen has investment value relative to the dollar, especially after Powell said that it is the right time to adjust policies."

After Powell's speech, with the rise of US Treasury bonds, the yield of all maturities fell, and the yield of benchmark 10-year Treasury bonds closed at 3.8%, down 8 basis points a week. The DXY dollar index has fallen more than 4% since June.

However, if the geopolitical conflict escalates, the uncertainty of the market will intensify. According to CCTV news, on the 25th, Israel attacked the Hezbollah stronghold in southern Lebanon. On Monday, the yen rose 0.5% against the US dollar and stood at the 144 mark.

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.