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All Eyes on Central Banker Meeting

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USD

On Monday, the Greenback held steady, inching away from four-month lows vs. the Japanese yen. It had plumbed in the previous session as traders turned their attentions from U.S. political unrest to the Federal Reserve's annual central banking meetings, which will be held in Wyoming.

Last week, the University of Michigan's consumer sentiment index unexpectedly rose to 97.6 in August from 93.4 in July, which was an eight-month low. Such strong data reflecting confidence in personal finances and in the outlook for the economy.

Investors will also be kept informed on U.S. housing and durable goods data to gauge the strength of the U.S. economy and how that would effect on the Fed. Reserve’s view on monetary policy.

No important reports are due from the U.S. economy today except Chicago Fed Nat Activity Index.

  • The S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell as much as 0.06%, to settle at 93.49.

GBP

The Sterling has picked itself up from five weeks lows of 1.2829 hit against the greenback on Friday, although remains under the 1.29 psychological mark owing to risk-aversion. Despites its attempts to cross, it also remains on the back foot owing to optimism around its American counterpart seen due to Bannon’s resignation. All eyes are focused on the second estimate of the United Kingdom’s Gross Domestic Product due later this week.

EUR

The common currency has started the week on a weaker footing amid continued demand for the greenback across the board. It has also remained under pressure in light of member of the European Central Bank minutes where members were concerned about the currencies appreciation. In the absence of any significant economic date, the German Buba monthly report and market sentiment will most likely determine the direction of the currency pair.

JPY

Despite tensions in North Korea, the yen has remained relatively stable at the beginning of the week. Geopolitical concern on the back of US-South Korean military exercises, which the North has called “reckless behavior driving the situation into the uncontrollable phase of nuclear war” may continue to be the main factor driving the currency. The yen had hit 108.60 against the greenback on Friday and this was bad news for Japanese exports. It has however pulled just above the 109 mark this morning coming back from a daily high of 109.38. 

 Gold

Gold prices were little changed early on Monday as the dollar settled, after touching a nine-month high on Friday when political and security concerns jangled traders’ nerves and stoked demand. Meanwhile, investors are looking forward to the upcoming top central bankers meeting later this week in Jackson Hole, Wyoming, where the heads of the European central banks and the U.S. will present keynote addresses. The speech of the U.S. Federal Reserve Chairman Janet Yellen, will be monitored for signal about an increase in interest rates before the end of the year.

Gold futures for December delivery rose as much as 0.11%, to settle at $1,293.04, while spot gold settled at $1,287.56.

Oil

Oil prices held steady on Monday, after hitting 3% high on Friday on the back of unconfirmed reports of a unit shutdown at one of the biggest oil refineries in the United States as well as data showing a weekly decline in the number of active domestic oil rigs.

On the release front, investors are awaiting the American Petroleum Institute weekly report on U.S. oil supplies, which will be published this Tuesday. 

U.S. West Texas Intermediate (WTI) crude futures (CLc1) fell as much as 0.21% to settle at $48.56, while U.S. Brent oil declined to $52.58 down by 0.27%.

The most important economic events:

  • USD Chicago Fed Nat Activity Index (JUL): (GMT 12:30) – Low – Forecast (N/A) – Previous (0.13).
  • USD U.S. to Sell USD39 Bln 3-Month Bills: (GMT 15:30) – Low –
  • USD U.S. to Sell USD33 Bln 6-Month Bills: (GMT 15:30) – Low –

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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