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Just Powell to go before we can enjoy a long weekend

Good morning


The terrible loss of life in Kabul is obviously dominating the headlines, particularly as there is a great chance that more attacks of this nature will be seen in the coming days. We hope not of course.


Otherwise focus is very much on the Jackson Hole event and whether there are any clues about Fed policy changes. Feds Kaplan and George, both known hawks, were adamant the economy is resilient to Covid and continue to look for tapering sooner rather than later. However with Powell speaking today at a virtual Jackson Hole it will be difficult for him to talk about a return to normality while the Jackson Hole event had to go virtual because of Covid. I still see some potential for some dollar upside but I do think Powell will try not to spook the markets.


It isn’t too late to buy cheap options to cover a hawkish surprise from Powell. 31 Aug 1.3650 GBPUSD put costs 15 usd pips ($1500 per £1m notional) or the 31 Aug 1.1750 EURUSD put costs 20 usd pips, or $2000 per EUR1m notional.


In France there are some reports that EU’s ex-Brexit negotiator Barnier may challenge Macron at the next election. That bodes well for UK/EU relations!


Anyway it’s a long weekend here in the UK, weather looks like it will stay dry which is about the best we can ask for. Probably have to drag the kids around for a walk somewhere with the dog but otherwise little planned. It is though the last weekend before the kids football season begins, which means Sunday is my last chance of a lie in for several months. Best make the most of that.


Remember that although it’s a bank holiday we are still available should you need anything. Otherwise have a great weekend and we’ll catch up next week.


- 13.30 US personal income, spending, core PCR

- 15.00 Us Michigan sentiment survey

- 15.00 Feds Powell speaks

- 20.30 CFTC position data


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