Trading Currencies: Jackson Hole Approaches, Will We See Taper?

Don’t Hold Your Breath for Friday

The most anticipated Jackson Hole Symposium is upon us. However, we question if the ‘anticipation’ is warranted, as consensus now has the probability of Powell announcing taper timeframes below 50%.

This step back from analysts can partly explain the easing in the USD this week. But we should point out that next week there will be another month of non-farm payrolls which are likely to be in the 750- to 800,000 range and CPI data that should remain elevated.

This suggests that the September Federal Open Markets Committee (FOMC) is a much more likely time for Powell to announce something. It is also the first time a 2024 dot plot will be added to the Fed’s dot plots release.

Lots to be mindful of going forward.

This Week’s Market News Highlights

Three major reports released this week have shaken the USD pairs:

• New home sales rose 1.0 per cent in July, a big miss on estimates of 3.4 per cent. But the annualised rate was 708,000 which beat estimates at 697,000. Growth is slowing that is clear, but overall new homes sales are at a historically strong level. Despite the better-than-expected result, the US dollar slid against most major currencies.
• Existing home sales are showing signs of continued strength. The medium price range remained on the high side to historical values and that was despite the fact inventories rose. Existing home sales hit an annual pace of 5.99 million homes sold, the median price is now US$359,000 up 17 per cent year on year.
• Manufacturing PMIs slipped slightly to 61.2 from 63.4. While the Services PMI fell to 55.2 from 59.9. Both however are still above pre-COVID 5-year averages. What caught our eye was the Service PMI continued to note difficulty in finding suitable staff.

Some Gain Ground Against US Dollar

Interesting to see that material exposed currencies have done well against the USD. Learn more about the US dollar’s ups and downs here

AUD/USD has moved off its $0.7134 low to be trading right back inside $0.72. At $0.7255 it is back at neutral on its RSIs.

NZD/USD jumped 0.9% to $0.695 on the RBNZ’s outlook. USD/CAD has fallen from $1.28 back to $1.261 as crude surges.

But against European and other G10 currencies, the USD is holding the line and remains overall in the ascendency.

EUR/USD is holding the $1.17 levels well, GBP/USD also is holding the new $1.37 handle. USD/JPY is hovering at the upper end of ¥109.

Thus, all eyes remain on Powell and the Board and possible new positive breakouts for the USD. Follow all the latest forex news here

This article is prepared by Lucia Han from Mitrade and is for reference only. We do not represent that the material provided here is accurate, current or complete. The article content neither takes into account your personal investment objects nor your financial situation, and therefore it should not be relied upon as such. You should seek for your own advice.