Spreadex Market Update
Traders Brace For Powell’s Jackson Hole Speech
Today sees the headline event of the week for financial markets with Fed Chairman Powell due to speak at the Jackson Hole Symposium.
On the back of yesterday’s upward revision to the Q2 GDP result, Wall Street rallied while the US Dollar is trading a little firmer. While still negative on the quarter, the move from -0.9% q/q initially to -0.6% was welcomed by markets.
Heading into today’s event, expectations are broadly in favour of a hawkish tilt from the Fed chairman. With inflation still at elevated levels, the market is looking for Powell to reaffirm the Fed’s commitment to pushing ahead with tightening and will be particularly interested in any clues as to whether September is likely to see another aggressive move (75bps or more).
Beyond that, traders will be keen to hear how Powell sees inflation developing next year. Any comments around an expected sharp drop off in inflation might prove bearish for USD while any outlook referring to an extended period of higher inflation should keep USD well supported.
Key Factors for Today
- USD firmer ahead of Jackson Hole event today – Powell expected to reaffirm Fed hawkishness
- Equities take a breather today amidst better start for USD
- ECB minutes show bank focused on further rate hikes with inflation forecast to continue higher
- GBP weakens on growing political uncertainty
- Oil prices slip back as Dollar stabilises
Coming Up
- USD US Core PCE
- USD UoM consumer sentiment
- USD Jackson Hole event – Powell speaks
Equities Surge Ahead of Jackson Hole
GBP has fallen back again into the end of the week with the UK currency the weaker performer today. Political uncertainty amidst a change in leadership is leaning on GBP sentiment and looks likely to remain a headwind as we approach the official hand-over of power in the UK.
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