Markets Await Powell's Jackson Hole Speech for Fed Clues.
Foreign exchange markets are starting the week in a quiet summer mode, but attention is building towards the annual Jackson Hole Economic Symposium, where central bankers from around the globe will gather. Last week’s US inflation and retail sales data continued to point towards a cooling economy, maintaining the market's expectation of a Federal Reserve rate cut in September. This week, fresh inflation data from the UK and key business activity surveys will be released, but the main event will undoubtedly be the keynote speech from Fed Chair Powell.
The Pound Sterling's focus this week is squarely on the upcoming UK inflation report. The data will be a critical input for the Bank of England following its recent decision to cut interest rates. A significant deviation from expectations in the CPI figures could cause a sharp repricing of the BoE’s future policy path and generate volatility for the Pound.
The US Dollar is trading in a consolidated range as the market awaits the next major catalyst. That catalyst is expected on Friday, when Federal Reserve Chair Jerome Powell is scheduled to speak at the Jackson Hole Symposium. Investors will be scrutinizing his every word for confirmation that a September rate cut is likely and for any hints about the potential trajectory of monetary policy beyond that.
The Euro continues to be influenced by the broader market narrative and the direction of the US Dollar. With the European economic calendar relatively light, the most significant release for the single currency will be the flash PMI data on Friday. This will provide a timely snapshot of the health of the Eurozone's business sector and could impact the European Central Bank's outlook.
Events to Watch This Week:
⦁ Wednesday, August 20: UK CPI Inflation Report
⦁ Thursday, August 21: Jackson Hole Symposium Begins
⦁ Friday, August 22: Global Flash PMIs & Fed Chair Powell's Speech at Jackson Hole
While the week may start quietly, it is bookended by significant event risk. The UK inflation report will be a key driver for the Pound mid-week, but the main event is Fed Chair Powell’s speech on Friday. His comments on the economic outlook and monetary policy are expected to set the tone for the markets heading into September.
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