8 months ago
27
The USD is modestly higher to unchanged to kickstart the new trading day. The economic calendar is clear of any US releases (Canada Retail sales will be released at 8:30 AM ET - est 1.5% vs -1.1% last month) as the market prepares for Fed Chair Powell's pivotal address at the annual Jackson Hole symposium.
Markets and policymakers alike are eager to glean clues on the Federal Reserve’s monetary policy outlook, especially amid growing speculation over a potential interest rate cut in September (the expectation is around 71% down from 100% at times last week). However, Powell faces a tough balancing act: inflation remains stubbornly high (core CPI rose 3.1% in July), while labor market indicators show signs of softness.
Against a backdrop of political pressure—most notably from President Trump demanding rate cuts and criticizing the Fed’s independence—many analysts anticipate Powell will offer a more cautious and nuanced tone, possibly signaling openness to future easing without fully endorsing immediate moves. He can point to the labor weakness from the last jobs report, so why not use it. Shift to a balanced view between employment and inflation That would be the best-case scenario for the doves. However, with one more US jobs report and one more round of inflation data between now and the September meeting, the Chair can wait - and let the US yield curve do the easing
BTW, at one point when the expectations were less, the
- 2 year was 4:00%,
- 10 year was 4.50% and the
- 30 year was at 5;00%.
The current yield curve shows:
- 2 year 3.801%
- 10 year 4.329%
- 30 year 4.922%
So the yield curve is lower, but marginally steeper with the 2-30 year.
Will the Powell text be released early? All indications are that the text release will be at 10 AM ET (it was the same last year).
What are some of the technical levels in play for the major currency pairs:
EURUSD: The EURUSD heads into Powell’s Jackson Hole speech with a bearish tilt, as the pair trades below the 100- and 200-hour moving averages as well as the midpoint of the move down from the July 1 high. These technical levels are acting as firm resistance and keep sellers in control. Unless price action can reclaim and hold above those moving averages, the bias remains more to the downside, with traders eyeing initial support near the broken 38.2% retracement level at 1.1558. Below that, and a swing area down to 1.15185 and the longer term 100 day MA become the targets. A more hawkish-than-expected tone from Powell could reinforce the downside pressure, while a dovish surprise may spark a corrective push higher into those key moving average barriers.
USDJPY: The price of the USDJPY fell earlier this week with the price chopping lower. That move saw the pair extend (reluctatantly) below the 100 and 200-hour MA (blue and green lines). Those declines on Tuesday, were reversed yesterday on better US data and yields moving higher. The price action did take the price back above the MA (and based at the levels before moving higher). The run, took the price above the 38.2% of the move down from August high at 148.00 and today, the price extended above the 50% midpoint but the price is waffling above and below that level. THe 50% can be a pivot for traders and the price trading around it seems to be a barometer.
On the topside, the 200-day MA and 61.8% at 149.11 are converged and that confluence increases the levels importance. ON a spike higher, watch the retracement back into that MA. It should be watched by traders.
On the downside, the 38.2% at 148.00 followed by the 100 and 200 our MAs at 147.78 and 147.592.
GBPUSD: ...more
The US stock futures are trading modestly higher with the:
- Dow industrial average up 135 points.
- S&P index up 12.23 points
- NASDAQ index up 37.92 points
English (US) ·