|

PPI gives Powell food for thought at this week’s Jackson Hole event

  • A mixed bag in Europe as we kick off a new week.
  • Trump pushes for Ukraine concessions to end the war.
  • PPI gives Powell food for thought at this week’s Jackson Hole event.

European markets have kicked off on a somewhat downbeat tone following on from a weekend that has been largely dominated by talk of Trump’s meeting with Putin in Alaska. Thursday’s PPI inflation gauge out of the US has provided grounds for concern over the potential resurgence in inflation pressures at the hands of Trump’s tariffs. This week brings a particular focus on the central banks once again with Powell’s appearance at the Jackson hole symposium potentially grabbing the headlines. Elsewhere, the inflation theme continues to play out thanks to the latest UK and Canadian CPI figures released on Tuesday and Wednesday.

Donald Trump’s meeting with Putin somewhat predictably ended with a lack of any agreement that ends the war with Ukraine, although he does enter today’s Zelensky meeting with a plan that is unlikely to go down well. From the Russian perspective, their desire to lock in their military gains as a newly expanded part of Russia will undoubtedly prove a huge stumbling block, while talk of land swaps are equally as unpalatable. Zelensky has already stated that the Ukrainian constitution makes giving up land to Russia “impossible”. However, another part of the solution lays in NATO membership, with Trump posting that he can end the war almost immediately if Ukraine pledges to give up aspirations on joining the group. While the US and Europe could still provide security guarantees as part of the deal, there will likely be a hesitancy given how the historical agreement to give up on their nuclear programme went. While we continue to see the 50% tariffs on India in part due to their purchases of Russian oil, the fact that China has remained untouched for doing the same means we are unlikely to see an escalation that could drive a spike in oil prices. 

This week brings fresh insights from the Jackson Hole Symposium, with the under-fire Fed Chair Powell expected to head up affairs on Friday. Coming hot off the heels of Thursday’s surprisingly high PPI figure (0.9%), we have seen a significant roadblock emerge that could hold back any major dovish shift from Powell. With the jobs creation clearly worsening in recent months, the Fed remain in a predicament on whether to assume that any initial warning signs do not turn into a fully-blown inflationary surge. From a market perspective, the lack of direction for the dollar highlights a distinct lack of confidence over exactly what the Fed Chair does in this key week.

Author

Joshua Mahony MSTA

Joshua Mahony MSTA

Scope Markets

Joshua Mahony is Chief Markets Analyst at Scope Markets. Joshua has a particular focus on macro-economics and technical analysis, built up over his 11 years of experience as a market analyst across three brokers.

More from Joshua Mahony MSTA
Share:

Editor's Picks

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying
The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.
Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff
Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.