The Kansas City Fed has been hosting its annual economic symposium at scenic Jackson Hole, Wyoming since 1978 and market interest in the conference is surely heightened by its late August timing – in the peak northern hemisphere summer vacation period, any major gathering of central bankers would draw substantial attention, explains Sean Callow, Research Analyst at Westpac.
Key Quotes
“As the KC Fed itself says, the global central bankers discuss “a topic that is not necessarily of immediate concern” so it is only the occasional year that Jackson Hole is pivotal for markets.”
“What about this year? Fed chair Yellen speaks Friday morning local time on financial stability. Such a topic doesn’t hint at much market response, though there is still scope for Fed officials to do side interviews which could focus on the monetary policy outlook. We suspect that senior officials will still sound like FOMC VC Dudley last week, arguing that rates should be raised again this year since the job market remains tight (hard to dispute) and recent weakness in inflation will prove transitory (more debatable).”
“One of the Fed’s excuses for not hitting its 2% inflation target – an unusually steep decline in cellphone costs. The debate will continue, but if the Fed mood at Jackson Hole is in line with our baseline view of announcing the start of balance sheet reduction next month and then hiking in Dec, then USD should firm against major currencies. EUR/USD for instance could be vulnerable if ECB president Draghi steers clear of any hints about the 7 Sep decision.”
“Beyond Wyoming, it remains impossible to ignore US politics, with e.g. USD/JPY bouncing on Steve Bannon’s departure from the White House, then falling on President Trump’s threat to shut down the government if Congress doesn’t approve funding for the border wall. Next week’s headlines are anyone’s guess, but the market focus will be intent on the return of Congress on 5 Sep, with a debt ceiling to be raised and a government to be funded.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remains on track to snap five weeks of losing streak
AUD/USD consolidates the previous day's strong move up to over a two-week high and remains on track to register gains for the first time in six weeks. The unwinding of the Trump trade, the Fed's failure to indicate that it was likely to pause rate cuts, the RBA's hawkish stance and hopes for more stimulus from China act as a tailwind for the Aussie.
USD/JPY holds steady above 153.00; intervention fears might cap gains
USD/JPY edges higher on Friday and reverses a part of the previous day's corrective slide from its highest level since July 30. The upbeat market mood and the BoJ rate-hike uncertainty undermine the safe-haven JPY. That said, speculations that Japanese authorities might intervene in the markets could cap the pair.
Gold price consolidates above $2,700 amid mixed cues
Gold price hovers above $2,700 during the Asian session on Friday and looks to build on the overnight solid recovery from the vicinity of the 50-day SMA support, or over a three-week low. In the absence of strong hawkish signals from the Fed, the unwinding of the so-called Trump trade and retreating US bond yields keep the USD bulls on the defensive.
Bitcoin, crypto market remain in uptrend following 25 bps Fed rate cut
The crypto market has remained in the green following the Federal Reserve's decision to lower interest rates. Historically, Bitcoin and the crypto market have reacted positively to low interest rate environments.
Outlook for the markets under Trump 2.0
On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.