Powell in a Jackson Hole

The annual gathering of central bankers, finance ministers and business leaders in Jackson

Hole, Wyoming will take place at the end of this week. The highlight of this event is widely

expected to be the address given to the symposium by the Fed chief on Friday afternoon.

There’s mounting speculation and conjecture that Jerome Powell will use this forum to

provide more clarity on future Fed policy.

Obviously, the Fed boss is still under considerable political pressure from the Whitehouse to

deliver more interest rate cuts, but in doing so he’s surely more than aware that talking the

economy down may only exasperate the chances of avoiding a recession. Personally, I

wished he’d tell the president where to get off, but of course that’s as likely as me having

lunch with the Pope! Nevertheless, emphasizing Fed independence is surely one indirect

route to try and deliver that in some way? Perhaps its ultimately, already too late for Powell

to save his own skin and if that is the case then, when and if that departure comes, I just

hope he doesn’t go quietly.

Meanwhile, the markets have steadied overnight with gains in Asia pretty much replicating

the US closes on Friday and trading as anticipated. That’s taken some steam out of gold and

helped deliver some further upside for US equity futures this morning. Meanwhile the dollar

has traded largely sideways with the USD index hugging a very tight 6-7 pip range

throughout the Asian session.

Outside of what, or what doesn’t come out of Jackson Hole later this week, the economic

release calendar is pretty dull really apart from whatever insights emerge from the Fed and

ECB policy meeting minutes, due on Wednesday and Thursday respectively.

The UK is still very much in the spotlight with further political nonsense plaguing the

newswires all weekend. Despite this the pound is holding up after relinquishing some of its

gains on Friday afternoon, after the GBPEUR touched 1.10 again and the GBPUSD posted its

first positive weekly close in 8. From a purely technical perspective a sustained break above

1.22 from here might open a path to more upside, perhaps towards 1.23-1.24. However, as

before I cannot see much lasting upside unless and until something materially changes on

the overall political outlook.

Elsewhere the USDJPY is mirroring the rebound in the equity space and the EURUSD is once

again in its usual tight range, replicating the moves in the USD index over the past 12 hours.

European yields have rebounded slightly this morning, but not by as much their US

counterparts and hence from that perspective there’s really no reason for EURUSD to

bounce much from here at the moment. Following on from my article last Friday where I

focused on the HK dollar, I should note that this one remains under pressure still as the new

week gets underway.

Outside of that there’s really not much to add this morning, but as we know, that can soon

change on the next headline of any note. Perhaps that might have to wait until 3pm on

Friday, providing Trump can keep his Twitter powder dry. I guess we shall all have to wait

and see on that.

Important Economic Releases Due This Week

19/08- 10.00am Eurozone Final Reading July CPI Inflation

20/08- 11.00am UK CBI Trends Total Orders and Selling Prices

21/08- 1.30pm Canada July CPI Inflation Report

21/08- 7.00pm US FOMC Releases Minutes from July 31 Policy Meeting

22/08- 11.00am UK August CBI Reported Sales

22/08- 12.30pm ECB Publishes Minutes from July Policy Meeting

22/08- 1.45pm US August (preliminary) Services and Manufacturing PMI Indexes

23/08- 12.30am Japan July National CPI (YOY) Inflation Report

23/08- 3.00pm Fed Chair Powell addresses Annual Symposium at Jackson Hole