Morning Wrap (22.08.2025)

Asia-Pacific equities are trading slightly higher today, with the exception of Japan’s JP225 (-0.25%) and Australia’s AU200.cash (-0.35%). Other indices are in positive territory, with Chinese benchmarks rising between 0.20% and 0.95%.

On the FX market, both the USD and AUD are gaining. The Australian dollar is supported by improved sentiment, while the U.S. dollar maintains its strength on the back of solid PMI data. Overall, FX markets remain in tight ranges ahead of Powell’s Jackson Hole speech, with investors cautious and risk appetite limited.

Markets expect Powell to emphasize a data-dependent approach, avoiding explicit signals about the September decision. Following hawkish Fed comments and stronger PMI readings, investors have reduced the probability of a 25 bp September cut to 73.3%. Goldman Sachs, however, expects Powell to strike a dovish tone, paving the way for three rate cuts starting in September.

Boston Fed President Susan Collins signaled openness to a September cut, warning that tariffs could hit consumers and weaken the labor market. Meanwhile, Chicago Fed’s Austan Goolsbee said the September FOMC meeting remains “open,” citing mixed economic signals and rising stagflation risks.

On the corporate side, Nvidia’s CEO thanked U.S. regulators for approving exports of H20 chips to China, stressing the product poses no national security threat. He confirmed ongoing talks with the U.S. government regarding future AI chips but emphasized that the final decision lies with regulators. Nvidia will also host its first-ever GTC conference in Washington, highlighting closer ties with the U.S. government.

In Japan, the core CPI came in at 3.1% y/y (forecast: 3.0%, prior: 3.3%), while headline inflation also slowed to 3.1% y/y (from 3.3%), confirming expectations of gradual disinflation.