- Draghi (ECB) and Yellen (FED) are going to speak in Jackson Hole later in the day
- US durable goods orders (preliminary) on the agenda
- German IFO ends the week with soft indicators from that country
Needless to say that most of attention is on Jackson Hole today where both Janet Yellen as well as Mario Draghi are expected to deliver their statements. There undoubtedly will be pivotal events during today’s session. Otherwise, there will be a preliminary reading of US durable goods orders and German IFO.
9:30 am BST – German IFO: Although, the current assessment of the German economy is continuously rosy (as ZEW and PMI indexes illustrated earlier this week), the future (6 months ahead) remains uncertain. According to ZEW, one could expect a slowdown with regard to economic performance, however it has to be said that ZEW and PMI differ and the latter is much more useful. Today’s IFO will confirm or deny the uninterruptedly favorable backdrop for the German economy. The consensus points to 115.5 which means a bit lower than 116 seen in July.
1:30 pm BST – US durable goods orders: There will be an initial release, hence its impact on the greenback could be larger. On the other hand, there is no doubt that investors could be cautious in terms of trading before the Yellen’s appearance. Either way, expectations suggest -6% mom in case of the headline and 0.4% mom when it comes to the core gauge stripping out transportation.
3:00 pm BST – Yellen’s speech in Jackson Hole: The latest data from the US economy has been slightly more reassuring, however inflationary pressures (being the most important issue for the Federal Reserve at this stage of a recovery) remain subdued. The US dollar is still quite cheap compared with the bond market and the speculative positioning heralds a possibility of unwinding of shorts. That said, risks related to her speech seem to be slightly tilted to the upside.
6:00 pm BST – Oil rig count: Last week saw a decline in a count of active oil rigs however US oil output picked up a second week on the trot. A subsequent drop in oil rigs could shore up oil prices as they have been closed in quite a narrow range of late.
8:00 pm BST – Draghi’s speech in Jackson Hole: Mr ’whatever it takes’ is anticipated to steal the show in Jackson Hole this year. Given an economic improvement seen in the euro area over the course of recent months, there are mounting pressures to begin reducing a lofty amount of the ECB’s balance sheet. Current expectations indicate that the process could kick off as soon as the beginning of next year therefore, any hints pertaining to the date of a start of normalization monetary policy could be closely retrieved by market participants. Let us add that liquidity will be already quite thin, thus larger swings on the euro or German DAX are definitely on the cards.
The EURUSD is hovering just above a notable support area at 1.1785. A possible breakout of that level could lead to an extended move towards 1.1745. Source: xStation5