What’s in store for the Greenback this week? Let’s take a look at the possible catalysts that might affect the dollar!
FOMC meeting minutes (Aug. 22, 6:00 pm GMT)
The Fed didn’t really inspire fireworks earlier this month when Governor Powell and his team decided to keep their policies and their biases steady for another month in August.
As in the July statement, the Fed maintained its optimism over the labor market conditions as well as the household spending and business investment that are propping up the economy.
We’ll know more about the members’ biases this week. Remember that the Fed’s hawkishness is one of the main factors that pushed the Greenback higher so far this year.
Are the members still in favor of at least one more rate hike this year? How do they think the U.S. trade policies are affecting economic prospects? Make sure you stay glued to the tube for any sound bites!
Durable goods orders (Aug. 24, 12:30 pm GMT)
Orders for items that have a long life expectancy inched 0.8% higher in June, which is lower than the 3.0% increase many had expected. Core durable goods also rose by 0.2% against expectations of a 0.5% uptick.
Underlying data revealed that the gains were mostly spurred by non-military capital goods orders, which signals that businesses continued their investment activity and purchases of equipment despite uncertainties related to tariffs.
This week analysts see the headline reading slipping by 0.3% in July, while the core figure is expected to print a 0.5% increase from June’s 0.2% gain.
Take note that Fed Governor Powell will give his Jackson Hole speech an hour and a half after this report, so it’s likely that we’ll see limited impact on dollar pairs as traders stay in the sidelines.
Jackson Hole speeches
It’s that time of the year again, folks! Major central bankers from all over the world will rub shoulders in Jackson Hole, Wyoming as they potentially talk about small things such as economic policy biases and global economic outlook.
Fed Governor Jerome Powell is scheduled to hit center stage on Friday at 2:00 pm GMT with a speech titled “Monetary Policy in a Changing Economy.”
Some of the mystery will have worn off after we see the FOMC meeting minutes printed earlier in the week, but it will be interesting to see the Fed head honcho’s opinions on relevant central bank concerns!
Last Week’s Price Review
The Greenback is turning in a mixed performance for the week (as of 5:00 pm GMT). The Greenback is a net loser, though, so the Greenback will soon be kissing two consecutive weeks of net wins goodbye.
The Greenback’s price action appears rather messy at first glance. It does get better if we simply remove USD/CAD and USD/JPY from the overlay of USD pairs, though.
As you can see, the Greenback had a mixed and messy start until it caught a bid across the board during Tuesday’s U.S. session.
Well, it was across the board initially, but the Loonie eventually overpowered the Greenback on Tuesday because of a catalyst that I already discussed in the weekly recap for the Loonie.
Getting back on topic, there were no direct catalysts for the Greenback’s rise on Tuesday. However, some market analysts were attributing the Greenback’s strength to safe-haven demand for the Greenback because of lingering concerns over the Turkish lira’s slump and its effects on European banks.
It’s also very likely that the Greenback was feeding off the euro’s weakness directly because, as mentioned in the weekly recap for the euro, the euro got whupped after Turkish President Erdogan’s little outburst.
Greenback bulls eventually faltered, however, and some market analysts attributed that to Qatar’s pledge to add $15 billion in direct investment to Turkey, as well as plans for German and Turkish officials to meet, which eased Turkey-related fears, supported the euro and the lira, and prompted the unwinding of safe-haven bets on the Greenback.
The Greenback then endured even more pain when Vice Minister of Commerce Wang Shouwen announced that China will meet with U.S. representatives in Washington for trade talks later this month, which likely convinced even more market players to unwind their safe-haven bets on the Greenback.
The Greenback would eventually find some respite during Thursday’s U.S. session. No clear reason why, though.
Sellers were lurking in the bushes, however, and so the Greenback eventually began to encounter selling pressure again, which market analysts attributed to weaker safe-haven demand and/or unwinding of safe-haven bets because of the prospect that China and the U.S. may have a meeting of the minds in the trade talks planned for next week.