European PMIs and Jackson Hole up next

Friday comes to an end, and besides Pound strength, there are little changes across the board, as choppy trading was the name of the game. Currencies had moved back and forth in pretty wide ranges, with little definitions when it comes to trend. And it with only get worse next week, as thin summer volumes will prevail, and the calendar is pretty empty. However, European PMI readings along with Jackson Hole symposium by the end of the week will provide further clues on Central Bank’s upcoming moves. 

European PMIs, August 22nd

• Above expected: EUR Bullish
• Below expected: EUR Bearish
• Key pairs to watch: EUR/USD, EUR/JPY, EUR/GBP

On Thursday, several individual economies including France and Germany, along with the EU as a whole, will be releasing their latest manufacturing and services PMI. The readings had been deep below 50, the line that separate growth from recession, for several months this year, having been on a steady, but painful recovery over the past few months: at the time being, only France Services  PMI is expected to remain below 50. The rest of the readings are expected with slightly improvements from previous months, all showing Europe is grinding out of recession which will support the EUR helping the currency to extend its latest advance. Negative news with readings falling back down below 50 on the other hand, should send investors unwind their buying positions, eroding the little confidence the EU gained over the past few months. 

Jackson Hole Symposium, August 22nd –24nd 

The Jackson Hole Symposium, is a forum for central bankers, policy experts and academics to come together to focus on a topic that is not necessarily of immediate concern, but instead looks into the future at emerging issues and trends; this year’s topic is  â€œGlobal Dimensions of Unconventional Monetary Policy.”

Hosted by the Federal Reserve Bank of Kansas City, the somewhat diminished guest list is a shift in this 2013: early April, FED Chairman Ben Bernanke announced he will miss the annual Jackson Hole monetary policy symposium due to a scheduling conflict, skipping the event for the first time since becoming the head of the Central Bank in 2006. But he won’t be the only absent: neither Mark Carney nor Mario Draghi will attend the conference this year. Instead, their N°2 will represent the economies, in the heads of Charles Bean for the BOE and Vitor Constancio for the ECB. Many members of the Fed’s policy-setting committee are not attending also.

Over the last few years, the symposium has been closely watched by forex traders, for purported clues about Fed policy. It was there, in 2010, that Bernanke hinted the second round of QE, triggering strong market moves. Somehow, we are expecting a much more quiet reunion this time that does not diminish the risk of wild spikes if there’s a “leak” of privileged data. 

Comments regarding upcoming economic policy movements, particularly from the FED and the possibility of QE tapering, will be the main concern of investors this year: tips suggesting a soon to come end for facilities will likely benefit the greenback, at least in the short term, while silence on the matter will likely keep the greenback under pressure until next FED meeting.