Jackson Hole Symposium Preview: Powell To Down the Dollar?

All eyes on the Fed. Is a policy change to ATI on the cards?

FED 10

Rather than meeting at Jackson Hole, the Wyoming ski resort, the coronavirus pandemic has forced the congregation of central bankers, policymakers and finance minister to go virtual. 


The Fed hosted meeting where major players discuss the issues facing global economies will be an online affair on Thursday 27th & 28th August.
Virtual or not, the markets will be watching regardless, the US Dollar, the Dow and Gold often experience heightened volatility around the event.

This year’s monetary policy symposium on the topic of “Navigating the Decade Ahead: The Implications of Monetary Policy” comes against of backdrop of unprecedented monetary policy intervention, to cushion economies from the devastating impact of the coronavirus pandemic. It also comes towards the end of the Fed’s nearly two-year policy review.

All Eyes on Powell
All eyes are on Federal Reserve Chair Jerome Powell’s keynote address due 2:10pm (UK time). The Fed Chair is expected to pre-announce the findings of the Monetary Policy Framework review, a review of the Fed’s policies and practices to deal with the “new normal” which is slow global growth, low inflation and low interest rates. 

ATI Chatter
If Jerome Powell were to talk about average inflation and the adoption of Average Inflation Targeting (ATI) traders will be sure to take note. 

ATI is important because it will mean a change in policy from a firm inflation target to one which permits an overshoot over time. This would be a hint to the market that the US central bank would allow inflation to stay above 2% for a while, essentially meaning that interest rates will stay lower for longer. 

Such an announcement would be a big deal but not necessarily be a huge surprise. It may not be fully priced in either. In that case we could see the dollar dive lower, Gold rebound after falling away from its all-time high and US stocks continue climbing.

EUR/USD
The EUR/USD trades -0.15% on Wednesday, with little change ahead of Jerome Powell’s speech at Jackson Hole. The pair is trading at 1.1815, towards the upper end of the daily traded range of $1.1772 - $1.1839. 
On the four-hour chart, the price trades below the 50 sma and 100 sma suggesting more weakness could be on the cards. Although it trades above its ascending trendline and 200 sma.
Immediate support can be seen at $1.1750, a break through here could open the door to $1.17. Resistance can be seen at $1.1825 &$1.1850 (50 & 100 SMA) and $1.1885.



More from DXY

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.