Gold is up to 1300, and markets are waiting for the annual Jackson Hole Symposium this week
The US Dollar settled to close lower against a basket of currencies after a volatile session which followed the Barcelona attacks and Washington’s political turmoil. Markets steadied after controversial key Trump strategist Steve Bannon resigned and risk sentiment improved. Trader’s adjusted their positions ahead of this week’s key Jackson Hole symposium.
U.S. University of Michigan Consumer Sentiment Index for July: 97.6 against a forecast 94.0 and previous 93.7
U.S. University of Michigan Inflation Expectations: 2.6% against the previous 2.6%.
Wall Street stocks rallied from lows at the close following the Bannon resignation news. The DOW closed down 0.35% while the S&P 500 finished flat.
Brent Crude Oil prices surged 3.59% to US$ 52.65 on signs that the US physical market is tightening. The ongoing turmoil in Venezuela also contributed to higher prices.
USD/DXY – slipped 0.27% to finish at 93.42 (93705 Friday)
EUR/USD – rose to close up 0.35% at 1.1762 (1.1722 Friday)
USD/JPY – closed lower at 109.20 from 109.57.
AUD/USD – higher, ended at 0.7930 from 0.7883 Friday.
GBP/USD – little-changed, finished at 1.2875 (1.2867 Friday).
Outlook: This week’s key risk event is the annual Jackson Hole symposium in Wyoming hosted by the Kansas City Federal Reserve Bank. The meet is attended by the world’s top central bankers, finance ministers and financial market participants. The meetings have caused significant market volatility in the past few years. It was in 2014 that Mario Draghi laid the ground for the ECB’s massive bond buying program following the Euro zone debt crisis. Expectations of any major policy news at the meeting have diminished. However traders will be looking for any clues from central bankers on how they intend to exit huge stimulus programs. The symposium is scheduled for August 24-25 (GMT), and August 25-26 (Local Time).
Today’s Economic Data releases:
Japanese All-Industries Activity Index for July: (GMT 4.30 am, Aug 21/Local Time 2.30 pm, Aug 21) – forecasts are for 0.5% following the previous -0.9%.
US Chicago Fed National Activity Index for July: (GMT 12.30 pm, Aug 21/Local Time 10.30 pm, Aug 21) – previous reading for June was 0.13, for forecasts were given
Canadian July Wholesale Sales : (GMT 12.30 pm, Aug 21/Local Time 10.30 pm, Aug 21) – forecasts: 0.6% from the previous 0.9%
Trading View: Expect a cautious start to the week following the turmoil that dominated the markets last week. Risk sentiment improved after the news of Bannon’s resignation. Bannon was seen as an opposing force to Steve Mnuchin, US Treasury Secretary as well as Gary Cohn, Trump’s chief economic adviser. While the Dollar eased on Friday, the Greenback still closed higher over the week. Extreme market positioning has been reduced according to the latest CFTC/Reuters Commitment of Traders report (week ended 15 August).
EUR/USD – The Euro managed to hold the key 1.1680 support level. On Friday the overnight low was 1.1709. Today, immediate resistance can be found at 1.1775 (overnight high). The next key resistance level is the 1.1800/10 level. Last week, ECB minutes expressed concern on the Euro’s strength. The Euro has been consolidating it’s strength since the start of this month. Likely range today 1.1710-1.1780. German ZEW Economic Sentiment data is due tomorrow.
USD/JPY – fell to close at 109.20 after trading to an overnight low of 108.60 on Friday. The rise in geopolitical tensions after the Barcelona attacks and Washington political turmoil saw demand for Yen increase. The Dollar bounced back following the Bannon’s removal as Trump’s chief strategist. USD/JPY has immediate resistance at 109.60. Immediate support can be found at 109.00 and then 108.60. Likely range today: 109.00-109.80
AUD/USD – rallied back strongly above 0.79 cents to 0.7944 overnight high before settling at 0.7929. The rise in copper and iron ore prices supported the Aussie. Overnight low on Friday was 0.7870. On the day, there is good support found at 0.7890. Likely range 0.7890-1.7940. There are no major Australian economic data releases this week. The Aussie will be dependent on the US Dollar moves.
GBP/USD – Sterling finished at 1.2875, little-changed from Friday’s 1.2867. There is immediate resistance at 1.2895 while support can be found at 1.2860. Tomorrow sees the release of UK Public Sector Borrowing for July. The second estimate for UK GDP is due Thursday. Expect consolidation with the likely range 1.2840-1.2900 range today.
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