Euro-Dollar Heading into the FED Summit |Fundamental Analysis|
As speculators predict a faster-than-expected timeline for the Federal Reserve's withdrawal of stimulus, the US Dollar has hit fresh all-time highs.
Chairman of the Federal Reserve, Jerome Powell, will give a lecture titled "The Economic Outlook" at Jackson Hole, Wyoming, on Friday, August 27, at 10 a.m. EDT/14 GMT. At the Jackson Hole Conference Center, a reception will be held in honor of the occasion.
With respect to the US Dollar, there is a mixed bias in the market. While the US Dollar (as measured by the DXY Index) has climbed to fresh all-time highs, speculators are beginning to predict that the Federal Reserve will remove stimulus at a quicker rate than previously anticipated.
Chairman of the Federal Reserve, Jerome Powell, will give a lecture titled "The Economic Outlook" at Jackson Hole, Wyoming, on Friday, August 27, at 10 a.m. EDT/14 GMT. At the Jackson Hole Conference Center, a reception will be held in honor of the occasion.
According to the IG Client Sentiment Index, there is a mixed tilt in the direction of the US Dollar as we enter the last week of August.
As of the beginning of the year, traders have begun to forecast that the Federal Reserve would begin to withdraw its stimulus package sooner than previously expected. With a 1.01 percent rise last week, the US Dollar (as measured by the DXY Index) rose to fresh yearly highs. For the first time since October 2020, the EUR/USD rate, which is the most significant component of the DXY Index, dropped by -0.81 percent and finished below 1.1700. Stock market declines weighed on the USD/JPY exchange rate, which only increased by 0.16 percent.
Although the US Dollar gained ground across the board as escalating delta variant concerns eroded confidence in global growth-sensitive currencies, the pound fell -1.76 percent, the Australian dollar fell -3.13 percent, the New Zealand dollar fell -2.94 percent, and the Canadian dollar rose +2.47 percent, all against the backdrop of rising delta variant fears. There will be a rush of action in the area of event risk, most of which will originate in the United States, towards the conclusion of August. There are five 'high' rated events scheduled for the Jackson Hole Economic Policy Symposium, which will take place over the course of a week and have the potential to produce significant event risk-based volatility.
There are many economic reports planned to be published on Monday, August 23. The Chicago Fed's July national activity index, the August Market manufacturing PMI (flash), and the July existing home sales data in the United States are all expected to be released.
Tuesday, August 24, will see the release of new home sales figures for the month of July in the United States.
According to the timetable, the data on durable goods orders in the United States will be published on Wednesday, August 25.
Thursday, August 26 will mark the beginning of the annual Jackson Hole Economic Policy Symposium. This week's economic statistics will include the second quarter Gross Domestic Product (GDP) report as well as the weekly jobless claims data.
On Friday, August 27, two reports will be released: the July US PCE report (the Federal Reserve's preferred measure of inflation) and an update on the August US Michigan consumer confidence index (both of which will be released on Friday, August 27). President Powell will deliver his Jackson Hole speech, which is provisionally titled "The Economic Outlook," at 10 a.m. Eastern Daylight Time/14 a.m. GMT on Monday, March 25th, 2019. As a result of the information that has been received so far about 3Q'21, the Atlanta Fed's GDPNow growth estimate has been lowered downward from a previous estimate of +6.2 percent to a revised estimate of +6.1 percent annualized growth. A new data set has caused the Federal Reserve to downgrade its forecast for real housing investment growth in the third quarter to 3.0 percent from 3.4 percent.
It is planned for publication on Wednesday, August 25, 2011, the latest adjustment to the Atlanta Fed GDPNow estimate for the third quarter of 2011.
Looking at the odds of a Fed rate hike with the yield on the 2-year US Treasury bond, we can observe whether the bond market is responding in a similar manner to how it behaved in 2013/2014 when the Fed began implementing its tapering plans. In accordance with historical data, the butterfly monitors variations in the yield curve that are not parallel in the United States. Based on historical trends, intermediate rates should rise more rapidly than short- or long-term rates, provided that the trend continues. However, even if the July FOMC minutes, which clearly differentiated between rate increases and tapering, had no effect on the likelihood of a rate hike, we can see that the US yield curve is shifting in a way that indicates that a more hawkish Fed is on the horizon, as illustrated in the chart below. The 2s5s10s butterfly has climbed to its highest rate since the Federal Reserve began talking about tapering off its bond purchases in June, despite the fact that there remain 87 basis points (bps) of rate hikes discounted until the end of 2023.
The combined effect of rising US Treasury yields – particularly when intermediate rates exceed both short- and long-term rates – combined with increased chances of a Federal Reserve rate hike in the past has resulted in a more positive trading environment for the US Dollar, according to historical evidence. When it comes to trading posture, the Commitment of Traders (COT) data for the week ending August 3 indicates that traders increased their net-long US Dollar holdings to 19,206 contracts from 18,880 contracts over the course of the week, according to the report. Based on information provided by Bloomberg, the net long position in the US Dollar has stayed around its highest level since the second week of March 2020. (the apex of coronavirus pandemic concerns in financial markets). according to the IG Client Sentiment Index, as we enter the last week of the month of August
Chairman of the Federal Reserve, Jerome Powell, will give a lecture titled "The Economic Outlook" at Jackson Hole, Wyoming, on Friday, August 27, at 10 a.m. EDT/14 GMT. At the Jackson Hole Conference Center, a reception will be held in honor of the occasion.
With respect to the US Dollar, there is a mixed bias in the market. While the US Dollar (as measured by the DXY Index) has climbed to fresh all-time highs, speculators are beginning to predict that the Federal Reserve will remove stimulus at a quicker rate than previously anticipated.
Chairman of the Federal Reserve, Jerome Powell, will give a lecture titled "The Economic Outlook" at Jackson Hole, Wyoming, on Friday, August 27, at 10 a.m. EDT/14 GMT. At the Jackson Hole Conference Center, a reception will be held in honor of the occasion.
According to the IG Client Sentiment Index, there is a mixed tilt in the direction of the US Dollar as we enter the last week of August.
As of the beginning of the year, traders have begun to forecast that the Federal Reserve would begin to withdraw its stimulus package sooner than previously expected. With a 1.01 percent rise last week, the US Dollar (as measured by the DXY Index) rose to fresh yearly highs. For the first time since October 2020, the EUR/USD rate, which is the most significant component of the DXY Index, dropped by -0.81 percent and finished below 1.1700. Stock market declines weighed on the USD/JPY exchange rate, which only increased by 0.16 percent.
Although the US Dollar gained ground across the board as escalating delta variant concerns eroded confidence in global growth-sensitive currencies, the pound fell -1.76 percent, the Australian dollar fell -3.13 percent, the New Zealand dollar fell -2.94 percent, and the Canadian dollar rose +2.47 percent, all against the backdrop of rising delta variant fears. There will be a rush of action in the area of event risk, most of which will originate in the United States, towards the conclusion of August. There are five 'high' rated events scheduled for the Jackson Hole Economic Policy Symposium, which will take place over the course of a week and have the potential to produce significant event risk-based volatility.
There are many economic reports planned to be published on Monday, August 23. The Chicago Fed's July national activity index, the August Market manufacturing PMI (flash), and the July existing home sales data in the United States are all expected to be released.
Tuesday, August 24, will see the release of new home sales figures for the month of July in the United States.
According to the timetable, the data on durable goods orders in the United States will be published on Wednesday, August 25.
Thursday, August 26 will mark the beginning of the annual Jackson Hole Economic Policy Symposium. This week's economic statistics will include the second quarter Gross Domestic Product (GDP) report as well as the weekly jobless claims data.
On Friday, August 27, two reports will be released: the July US PCE report (the Federal Reserve's preferred measure of inflation) and an update on the August US Michigan consumer confidence index (both of which will be released on Friday, August 27). President Powell will deliver his Jackson Hole speech, which is provisionally titled "The Economic Outlook," at 10 a.m. Eastern Daylight Time/14 a.m. GMT on Monday, March 25th, 2019. As a result of the information that has been received so far about 3Q'21, the Atlanta Fed's GDPNow growth estimate has been lowered downward from a previous estimate of +6.2 percent to a revised estimate of +6.1 percent annualized growth. A new data set has caused the Federal Reserve to downgrade its forecast for real housing investment growth in the third quarter to 3.0 percent from 3.4 percent.
It is planned for publication on Wednesday, August 25, 2011, the latest adjustment to the Atlanta Fed GDPNow estimate for the third quarter of 2011.
Looking at the odds of a Fed rate hike with the yield on the 2-year US Treasury bond, we can observe whether the bond market is responding in a similar manner to how it behaved in 2013/2014 when the Fed began implementing its tapering plans. In accordance with historical data, the butterfly monitors variations in the yield curve that are not parallel in the United States. Based on historical trends, intermediate rates should rise more rapidly than short- or long-term rates, provided that the trend continues. However, even if the July FOMC minutes, which clearly differentiated between rate increases and tapering, had no effect on the likelihood of a rate hike, we can see that the US yield curve is shifting in a way that indicates that a more hawkish Fed is on the horizon, as illustrated in the chart below. The 2s5s10s butterfly has climbed to its highest rate since the Federal Reserve began talking about tapering off its bond purchases in June, despite the fact that there remain 87 basis points (bps) of rate hikes discounted until the end of 2023.
The combined effect of rising US Treasury yields – particularly when intermediate rates exceed both short- and long-term rates – combined with increased chances of a Federal Reserve rate hike in the past has resulted in a more positive trading environment for the US Dollar, according to historical evidence. When it comes to trading posture, the Commitment of Traders (COT) data for the week ending August 3 indicates that traders increased their net-long US Dollar holdings to 19,206 contracts from 18,880 contracts over the course of the week, according to the report. Based on information provided by Bloomberg, the net long position in the US Dollar has stayed around its highest level since the second week of March 2020. (the apex of coronavirus pandemic concerns in financial markets). according to the IG Client Sentiment Index, as we enter the last week of the month of August
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