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  • richard evans

Can Powell say we are heading for normal at a virtual Jackson Hole?

Good morning

Another day of consolidation yesterday, GBP a tad higher against USD at 1.3750 but nothing too dramatic, pretty steady against EUR with EURGBP at 0.8560 (GBPEUR 1.1680). EURUSD also a little higher at 1.1770. Some excitement overnight as South Korea raised interest rates by 25bps to 0.75%, with more tightening expected. Its not a big move but any rate rise at this stage is newsworthy.

Jackson Hole is the main event although there is a possibility it turns into something of a non-event. There had been some thinking that Powell would use it as an opportunity to say ‘the worst is behind us, need to start reducing asset purchases’ when he speaks Friday. However the simple fact that the event is now online rather than in person suggests any return to normality is still some way off. Some sort of announcement of reducing asset purchases is still expected, but perhaps not from Jackson Hole. I mentioned the cheap downside EURUSD and GBPUSD options yesterday, still seem a good way to play a hawkish surpise from Powell.

Australia seems to be struggling to control Covid infections as NSW reports nearly 1,000 new cases yesterday, the increase coming despite lockdowns, although they do say that reopening is more about vaccination rates than infection rates. They have been a bit slow with vaccinations, perhaps because for a while it looked as though they had managed to contain the virus.

While I mention vaccinations, on the back of Pfizer getting FDA approval, they are now looking at getting FDA approval for a booster shot. J&J also say a booster shot greatly increases immunity. With that recent news of waning protection from vaccinations after a few months, we’ll all surely be needing boosters in the not too distant future.

I’m off to watch Spurs later today, the Europa conference may prove good for me as its about the only way I’m likely to secure tickets for the time being. It certainly won’t be a full-house but will give my youngest son a chance to experience the stadium. And I’m looking forward to having another ‘fill from the bottom’ pints. Its just not a straightforward journey to get there. It was much better when they were playing at Wembley!

- 12.30 ECB minutes

- 13.30 US GDP, core PCE, initial jobless claims

- 15.00 Jackson Hole begins

- 16.00 ECBs Schnabel speaks

- 00.30 Japan Tokyo CPI

- 02.30 AUS retail sales

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