Aug 28 Reuters A look at the day ahead in U.S. and global markets by Amanda Cooper.

One of the overarching market themes this year aside from the hype around artificial intelligence has been investors avidly building up bets on the Federal Reserve finally announcing an end to its cycle of rate hikes, only to have that optimism dashed.

There39;s no doubt that the U.S. central bank is nearing the end of its mission to wrestle down inflation. Headline consumer price pressures are rapidly abating, thanks to a wholesale retreat in food and energy prices. Headline inflation in July rose 3.2 on an annual basis a far cry from last June39;s 9.1 and nearing the Fed39;s 2 target.

There39;s just a couple of easily identifiable snags.

Inflation as reflected in the Fed39;s preferred data point the core personal consumption in expenditures PCE index is running at 4.1, having peaked February 2022 at 5.4.

The economy isn39;t generating jobs as quickly as it was a year ago, but it39;s still set to add another 170,000 in August, which will mean more than 25 million workers will have been added to nonfarm payrolls since the depths of the COVID pandemic in April 2020.

And crucially, Fed Chair Jerome Powell has once again reinforced the higher for longer mantra that has underpinned most of his, and his officials39;, communications this year, no matter how much market participants have bet otherwise.

The dollar, which economist Mohammed ElErian described earlier this year as the…