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