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Draghi and Yellen, Market Movers Today

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USD

On Friday, the greenback rose vs. the yen ahead of a meeting of the world's most powerful central bankers in Jackson Hole, as many traders believe that comments by Yellen and Draghi could provide volatility for the dollar.

Fed Chair Janet Yellen is due to give a speech at 14:00 GMT, European Central Bank president Mario Draghi will speak at 19:00 GMT.

In terms of data, U.S. existing home re-sales unexpectedly declined in July to an 11-month low, reducing optimism over the health of the U.S. housing market. The industry data showed that home re-sales unexpectedly fell by 1.3% in July from 5.51 million units in June. However, data published by the Labor Department on Thursday revealed that the number of Americans filing for unemployment benefits rose less than expected last week. Initial claims for state unemployment benefits rose by 2k to a seasonally adjusted 234k for the week ended Aug. 19, indicating further tightening in labor market conditions.

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.03%, to settle at 93.306 pips.

EUR

The common currency treaded quite carefully in yesterday trading sessions in anticipation of Mario Draghi’s speech at the banker’s conference in America. One segment of traders believe clues will be dropped about tapering whilst the other believe the speech will disappoint. In terms of the economic calendar, we have the German Ifo business client index and the country’s final GDP readings due.

GBP

The United Kingdom’s GDP estimate printed results in line with expectations with no changes from the 0.3% figure. The preliminary business investment showed unchanged reading for the quarter, which was lower than the predicted 0.2% increase. In addition, the CBI realised sales slipped to -10 from 22 instead of decreasing to 15. No reports are due from the British economy today.

JPY

Despite Japan’s core consumer price index rising as much as 0.5% for a seventh consecutive month in July from a year earlier, the U.S. dollar rose vs. JPY as risk appetite kicked in and profit taking took place ahead of the speeches at Jackson Hole.

Gold

Gold prices declined yesterday, hampered by a strong dollar with many analysts and traders keeping a watchful eye on the meeting of central bankers in Jackson Hole for cues on further interest rate hikes, which would eventually derive demand for the non-yielding yellow metal. 

Meanwhile, diverging factors, like concerns over the US President Donald Trump's recent comment to shut down the government, and a modest uptick in the US Dollar, coupled with improving investors’ appetite for riskier assets - like equities, has failed to provide any fresh impetus to the precious metal. 

Technically, gold could trade higher and set a new high for the year so far, if Fed Chair Janet Yellen indicates that Fed may not need to hike rates much more. Earlier today, Gold Futures - Dec 17 rose slightly by 0.1%, to settle at $1,292.17.

Oil

Earlier today, Oil prices edged higher as the U.S. petroleum facilities prepared for potential output cut as Hurricane Harvey, which quickly developed in the Gulf of Mexico, headed for the heart of the nation’s oil industry in the Gulf of Mexico. The US National Hurricane Center (NHC) announced on Friday that the hurricane Harvey has strengthened further, turning out to be potentially the biggest hurricane to hit the US mainland in more than ten years, with life-threatening floods expected along the Gulf Coast. Energy companies shut coastal refineries and halted onshore drilling in south Texas already on Thursday. Hence, both crude benchmarks remain underpinned so far this Friday amid potential supply disruption concerns. According to the U.S. Energy Information Administration, the U.S. Gulf of Mexico is home to about 17% of the nation’s crude output and 5% of dry natural gas output.

Crude Oil WTI Futures - Oct 17 rose as much as 0.72%, to settle at $47.77, while Brent Oil Futures - Oct 17 settled at $ 52.44.  

The most important economic events:

  • EUR German IFO - Current Assessment (AUG): (GMT 08:00) – Medium – Forecast (125) – Previous (125.4).
  • USD Durable Goods Orders (JUL P): (GMT 12:30) – Important – Forecast (-6.0%) – Previous (6.4%).
  • USD Yellen speaks at Fed Conference in Jackson Hole, Wyoming: (GMT 14:00) – Important.
  • EUR ECB President Mario Draghi speaks in Jackson Hole: (GMT 14:00) – Important.

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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