This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
This week, central bank policymakers from across the world descend upon Wyoming for the US Federal Reserve’s 39th annual Jackson Hole symposium. 2017’s three-day meeting, focusing on the topic of ‘Fostering a Dynamic Global Economy’, is set to be by Fed Chair Janet Yellen and ECB President Mario Draghi, with both speaking at the meeting on Friday.
Following on from the release of the minutes from the Fed’s July meeting, in which policymakers were divided over the subject, Yellen will be closely watched for any indication that the Fed will soon announce a firm date for commencing the trimming of the central bank’s bloated balance sheet. The political uncertainty stemming form the White House is only likely to make her comments even more important in terms of their market impact, with FX traders looking to trade all and any news emerging from the President’s abode.
However, Yellen may see her address overshadowed by her European peer.
In a similar vein to his US counterpart, the European Central Bank Chief has used Jackson Hole as a platform to announce major policy changes, with his last attendance heralding the announcement of the latest round of the ECB’s Quantitative Easing (QE) programme.
Many are expecting his appearance this year to conclude by announcing the beginning of QE tapering.
However, after appearing to turn significantly more hawkish at his last public address, policymakers have since attempted to dial back his rhetoric in order to ease Euro strength. A Reuters report that stated he would not make a policy announcement adds further to the dovish melting pot.
An unscheduled major policy announcement could rekindle the Euro rally which looks as though it has topped out in August. On the other hand, inaction will likely be met with disappointment from Euro bulls and delight for its bears.
While policymakers from the Bank of England are unlikely to rattle any cages at Jackson Hole, they will have their eyes firmly set on Thursday’s final UK Q2 GDP reading (9:30am). After slowing to its weakest annual growth rate since 2016, officials will be hoping revisions can lift the crucial economic barometer marginally higher from its preliminary reading almost a month ago.
But Sterling traders should also brace themselves for yet more Brexit rhetoric, with further negotiations and position papers being released over the course of the week. Having seemingly reached a rare moment of harmony withing the British Cabinet, Prime Minister Theresa May is confident that the second round of negotiations will begin by October.
Trading close to its 5-month rising lows support level against the US dollar while trading at its lowest against the Euro since October’s flash crash, Sterling bulls will hope a significant show of faith from this week’s talks will help the UK currency to ally against both. Bears will hope delays from the EU side of negotiations will make the October target for the second phase of talks to remain out of reach.
Other data of note include UK CBI Trends (Tuesday; 9:30am), German ZEW Surveys (Tuesday; 10am), European and US Manufacturing and Service PMIs (Wednesday; 8-9am and 2:45pm, respectively), Eurozone Consumer Confidence (Wednesday; 3pm), German Q2 GDP final (Friday; 7am) and US Durable Goods (Friday; 1:30pm).
Key data this week (Sign up here to receive our daily live macro-calendar)
—
UK Economic Announcements
09:30 CBI Trends
Intl Economic Announcements
10:00 ZEW Surveys (DE)
14:00 House Price Index (US)
15:00 Richmond Fed (US)
—
Intl Economic Announcements
8-9am Manufacturing & Services PMI (European; various)
12:00 MBA Mortgage Applications (US)
14:45 Manufacturing & Services PMI (US)
15:00 Consumer Confidence (EZ)
15:00 New Home Sales (US)
15:30 EIA Crude Oil inventories (US)
—
UK Economic Announcements
09:30 Q2 GDP, Index of Services, BBA Mortgages, Imports/Exports
11:00 CBI Sales
Intl Economic Announcements
All Day US Fed hosts Jackson Hole Symposium
01:30 Manufacturing PMI (JP)
13.30 Weekly Jobless Claims (US)
15:00 Existing Home Sales (US)
16:00 Kansas City Fed (US)
Intl Economic Announcements
All Day US Fed hosts Jackson Hole Symposium
00:30 CPI (JP)
07:00 Q2 GDP Final (DE)
09:00 IFO Surveys (DE)
13:30 Durable Goods (US)
18:00 Baker Hughes Rig Count (US)
For information on deliverable FX, including how you can save thousands on currency exchange, put in a call to our trading floor on 0203 051 7461. It’s all part of the service!
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
Comments are closed.