Weekly Outlook: August 20 - 24
This week investors will get the chance on Wednesday to parse through the minutes of the Federal Reserve’s August meeting, when it left interest rates unchanged and indicated that it remains on track for additional rate hikes this year.
Investors will be on the lookout for any tweaks to the Fed’s outlook on inflation, the economy and trade war fears.
On Friday, Jerome Powell is to make his first appearance as Fed chairman at the annual economic symposium in Jackson Hole. The conference will be closely scrutinized for clues to the monetary policy direction of some of the world’s most important central banks.
Geopolitical risks will also remain in focus this week, with the U.S. expected to impose fresh sanctions on Russia on Wednesday. On Thursday, Washington is expected to slap 25% tariffs on an additional $16 billion of Chinese imports, to which Beijing has threatened to retaliate in kind.
The dollar fell against a basket of the other major currencies on Friday, pulling back from a 13-month high hit earlier in the week as worries over trade tensions between the U.S. and China eased, dampening safe haven demand.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.50% at 96.00 late Friday, the largest one day decline in almost a month.
Market sentiment was boosted by news that Beijing is set to resume trade talks with Washington this week, although at a lower level than previously. It will be the first round of trade talks since June and could be a step towards easing trade tensions between the world’s two largest economies.
Ebbing concerns over the fallout from the Turkish lira’s recent selloff also helped bolster the euro against the dollar.
EUR/USD was up 0.54% to 1.1438 in late trade, having rebounded from Wednesday’s 13-month low of 1.1300.
The lira ended down 3% against the dollar late Friday, having fallen as much as 7% earlier in the day. The currency crisis has fueled concerns about the Turkish economy, in particular its dependence on energy imports and its foreign-currency debt burden.
The dollar ended the day modestly lower against the traditional safe haven yen and the Swiss franc, with USD/JPY sliding 0.36% to 110.50 and USD/CHF dipping 0.1% to 0.9958.
The greenback was also lower against its Canadian counterpart, with USD/CAD losing 0.75% to trade at 1.3062 after robust inflation data was seen as boosting the chances for another rate hike by the Bank of Canada in the coming months.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, August 20
Atlanta Fed President Raphael Bostic is to speak at an event in Tennessee.
Tuesday, August 21
The Reserve Bank of Australia is to publish the minutes of its latest policy setting meeting.
The UK is to report on public sector borrowing figures.
Wednesday, August 22
New Zealand is to report on retail sales.
Later in the day, Canada is to publish retail sales figures.
The U.S. is to produce data on existing home sales and the Fed is to publish the minutes of its August meeting.
Thursday, August 23
The euro zone is to release data on manufacturing and service sector activity.
The European Central Bank is to publish the minutes of its latest policy setting meeting.
Central bankers and economists are to gather in Jackson Hole, Wyoming for the first day of a three day event.
Friday, August 24
The U.S. is to release data on durable goods orders.
Fed Chairman Jerome Powell is to speak at the Jackson Hole Symposium.