The US dollar was looking for a new direction and it had a mixed week. The last full week of August features US housing data, durable goods orders and perhaps most importantly, the Jackson Hole Symposium. Here are the highlights for the upcoming week.
The US dollar suffered from Trump’s troubles, which affect things that markets care about: infrastructure spending and the position of Gary Cohn, a candidate for Fed Chair. The relatively dovish meeting minutes do not help. On the other hand, the all-important retail sales report beat expectations. In Japan, GDP grew more than expected, but the currency dropped with tensions about North Korea. The ECB doesn’t like the strong euro, which initially dropped, but recovered. The pound received mostly positive data from wages and retail sales, but still struggled as inflation missed expectations. The Australian jobs market looks good, supporting the Aussie.Updates:
- US New Home Sales: Wednesday, 14:00 .Sales of new homes trigger wider economic activity around infrastructure and are correlated to the wider economy. In the last report for June, the annualized level of sales ticked up from 605K to 610K. A similar figure is on the cards now: 615K.
- Crude Oil Inventories: Wednesday, 14:30. The weekly barometer of oil inventories has mostly shown drawdowns in inventories of late. This is positive for oil bulls, yet inventories are still high. There is an inverse correlation between the dollar and oil prices.
- UK GDP (second estimate): Thursday, 8:30. The first estimate of UK GDP growth for Q2 2017 met expectations at 0.3%. In general, growth has significantly slowed down in the UK in 2017 after a strong 2016. Brexit begins biting. The number will likely be confirmed now.
- US Existing Home Sales: Thursday, Thursday, 14:00. Sales of second-hand homes consist of most transactions and gauging their level serves as another indicator of the sector and the economy. In June, these came out slightly below expectations at 5.53 million annualized. A small rise could be seen now: 5.57 million is projected.
- US durable goods orders: Friday, 12:30. Sales of durable goods reflect long-term investment and are eyed by the Fed. The headline figure is often skewed by aircraft sales, making the core figure more important. Headline sales jumped by no less than 6.4% in June while core sales disappointed with a minimal rise of 0.`%. A fall of 5.7% is on the cards for the headline while the core number is expected to rise by 0.4%.
- Jackson Hole Symposium – Draghi’s speech: Friday 19:00 This key economic gathering in Wyoming has been used to set the stage for significant changes in monetary policy, such as some of the Fed’s QE programs and also the ECB’s QE program. The topic for this year’s gathering is “Fostering a Dynamic Global Economy”. The key speeches are expected by Fed Chair Janet Yellen and ECB President Mario Draghi. The announcement that Draghi will attend the event sparked speculation that he will use the event to hint about QE tapering in the ECB’s following meeting. However, given the recent rise of the euro, some expect him to provide a dovish outlook, trying to weaken the common currency.
- Jackson Hole Symposium: Yellen’s speech: will be eyed for any hints about the next rate hike. We already know that the Fed intends to begin squeezing its balance sheet in September, but the fate of the December rate hike is unclear given the recent softness in inflation.
*All times are GMT
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