After talking about it for weeks, the day has arrived for Federal Reserve Chairman Jerome Powell to give his speech in Jackson Hole.
Overview
The Street widely believes that Powell will provide “strong guidance” on future policy and likely outline how the Fed will begin tapering stimulus in the coming months. The wild card remains the delta variant of the coronavirus. Hospitalizations climbed to an 8-month high yesterday and the virus continues to be a cloud over the economic recovery. Therefore, Powell may find the scope to hedge his comments.
The dollar gained a bit during yesterday’s session but was flat overnight. Equity markets turned negative following deadly attacks at the Kabul airport. ISIS-K, a sworn enemy of the Taliban, took responsibility for the attacks adding complexity to an already turbulent situation.
Personal income and spending are due out at 8:30 a.m. and will be highly analyzed. The Fed’s favorite inflation metric, the PCE deflator is also due out. Powell’s anticipated speech is slated for 10 a.m. It will be a busy, volatile morning.
What to Watch Today…
- Jerome Powell at 10 a.m.
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EUR ⇓
EUR/USD is dancing in familiar ranges ahead of the Jackson Hole symposium. Volatility in the pair has been falling but that is likely to change later this morning. The European economic docket was light with only French consumer confidence falling to 99 in August, down from 100 a month earlier.
CAD ⇓
The Canadian dollar is down slightly this morning despite a modest uptick in the price of oil. The Canadian economic docket includes the price of industrial products and raw materials, which is unlikely to have a major impact. As with most currency pairs, traders are in wait-and-see mode ahead of Jerome Powell’s speech.
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