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Dollar Recovers, Jackson Hole Conference in Focus

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USD

On Tuesday, the Greenback went up vs. a basket of major currencies, after falling as much as half a percent yesterday, with market players turning on the annual central banking conference in Jackson Hole this week for an insight into the future  of monetary policy.

Technically, If Yellen's speech increases market anticipations that the Fed will hike interest rates before the end of the year, the U.S. dollar could trade higher.

In addition, the U.S. dollar inched higher vs. Japanese yen President Donald Trump said; the U.S. would stay the course on military support to Afghanistan after 16 years.

On the release front, House Price Index (HPI), which is a broad measure of the movement of single-family house prices, is expected to rise to 0.5% from 0.4%. 

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down -0.06% at 93.49.

GBP

The Sterling pound fell as much as 0.43% against the Greenback to $ 1.2847, as Brexit concerns loom across the UK. Markets are awaiting key speeches by ECB president, Mr Draghi however, the BoE governor Mark Carney is not set to appear at the central banker event. The Rightmove HPI data printed a 0.9% drop against an earlier 0.1% increase. We have the CBI industrial order expectations due next with a fall to 8 from 10 anticipated.

EUR

The common currency was able to make some headway against its peers on the back on markets factoring in taper remarks from the ECB’s Mario Draghi at the upcoming Jackson Hole Symposium. Looking ahead, the major may receive a fresh direction on the back of the ZEW survey. The ZEW will release its Economic Sentiment Index for the next six months for Germany. A positive print in the ZEW data may offer a fresh push to the common currency bulls sending the EURUSD above the 1.18 handle. However, if the readings disappoint, the currency could correct itself towards the 1.1750 level.

JPY

The Japanese currency strengthened on the back of weakening demand for the greenback and an increase in risk aversion. Japans “all industry activity index” printed a 0.4% increase against a predicted 0.5% uptick. There are no major market moving economic data due for release from the Japanese economy today.

Gold

Gold prices drifted lower on early Tuesday amid stable dollar, dropping to a fresh session low near $1285 per ounce early during the European session. The precious metal lost ground from yesterday when it moved closer to the $1300 level, being held down by a slight pickup in greenback demand. This usually reduces the demand for dollar dominated commodities. Attention now turns to the geopolitical front as investors continue to monitor tensions over North Korea and remain cautious ahead of the annual meeting of top central bankers and economists, which is set to take place from Thursday to Saturday. With major speeches from Mario Draghi and Janet Yellen in the spotlight, their comments will be monitored closely for new policy signals from the world’s two most powerful central banks. 

Oil

Oil prices rose on Tuesday, on signs of gradual tightening in global supply, especially in the United States. Investors were turning their attention to upcoming U.S. crude inventories data, which is expected to decline for an eighth consecutive week and fall by 3.4 million barrels.

U.S. West Texas Intermediate (WTI) crude futures CLc1 settled at $47.80 a barrel, up 27 cents, or 0.57%, while Brent crude futures, LCOc1 the international benchmark for oil prices, was at $ 51.97 per barrel.

The most important economic events:

  • EUR Euro-Zone ZEW Survey (Economic Sentiment) (AUG): (GMT 09:00) – Important – Forecast (N/A) – Previous (35.6).
  • EUR German ZEW Survey (Economic Sentiment) (AUG): (GMT 09:00) – Important – Forecast (15) – Previous (17.5).
  • USD House Price Index (MoM) (JUN): (GMT 09:00) – Important – Forecast (0.5%) – Previous (0.4%).

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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