Jackson Hole lotta love for rate cut
Global sharemarkets surged Friday and the US dollar tumbled after Federal Reserve chair Jerome Powell hinted at a possible rate cut at next month’s meeting.
Powell said the Fed may adjust its policy stance at the 16–17 September meeting, citing a shifting balance of risks. He added that steady unemployment and other labor market indicators give the Fed room to move cautiously.
The US dollar dropped on the news. The euro rose 1.0 percent against the dollar, while the dollar fell 1.0 percent against the yen.
In the region, the New Zealand dollar gained 0.8 percent, the Singapore dollar rose 0.6 percent, and the Chinese yuan climbed 0.2 percent to its highest level this month.
Aussie climbs ahead of RBA minutes, CPI
The Australian dollar led major currencies on Friday, jumping 1.1 percent against the US dollar.
The rally helped the Aussie recover from two-month lows, but risks remain. A failure to break higher during the mid-August rebound could signal a shift toward a downtrend.
Volatility is likely this week with key events ahead. On Tuesday, the Reserve Bank of Australia releases minutes from its 12 August meeting, where it cut rates by 25 basis points. On Wednesday, monthly inflation data is due.
US inflation and spending data in spotlight this week
Inflation will be front and center this week, with the US personal consumption and expenditure (PCE) report — the Fed’s preferred inflation gauge — drawing close attention.
Australia releases inflation data Tuesday, followed by individual European countries on Thursday. The European Central Bank’s inflation expectations report also lands Thursday, ahead of Europe-wide CPI figures on 2 September.
Growth data is also in focus. The US June-quarter GDP report is due, with markets watching to see if last month’s upside surprise is repeated. France and Canada will also release GDP figures.
While most central banks are cutting rates, Japan is heading in the opposite direction. Japanese bond yields hit a 25-year high last week, and the Bank of Japan is inching toward another hike. This week, investors will watch employment and inflation data ahead of the 19 September policy meeting.
Aussie leads rebound from lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 25 – 31 August
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
