Breaking News: Federal Reserve Chair Jerome Powell's Speech at Jackson Hole Could Impact USD Direction
In a recent note from Macquarie analysts, it is expected that Federal Reserve Chair Jerome Powell will strike a moderate tone during his speech at the Jackson Hole symposium. While markets will be closely watching Powell's remarks, Macquarie suggests that he is unlikely to take a dovish stance.
The analysts at Macquarie highlight that Powell's tone, combined with upcoming data and political developments, could influence the direction of the U.S. dollar (USD) in the near term. They anticipate a moderate tone from Powell, which could have implications for currency markets and investor sentiment. However, they doubt that Powell will sound overly dovish.
Additionally, the analysts point out that a potential post-convention rally in Kamala Harris's polls next week could contribute to further weakening of the USD. They place Powell's anticipated remarks in the context of broader market dynamics, particularly the recent decline in the USD.
Over the past four weeks, the USD has experienced significant weakness, attributed by Macquarie to the unwinding of the "Trump trade" favoring a strong dollar. This decline has also been influenced by expectations that the European Central Bank (ECB) and the Bank of England (BoE) may not match the Fed's anticipated rate cuts this year.
Furthermore, the analysts observe that European wage growth could play a role in shaping the near-term outlook for the USD. Recent indicators suggest that European inflation might remain a deeper concern for ECB policymakers than for the Fed, especially due to persistent service-sector wage pressures.
In conclusion, while Powell is expected to maintain a balanced tone at Jackson Hole, Macquarie's note emphasizes the intricate web of factors, including wage growth in Europe and U.S. political developments, that could impact the trajectory of the USD in the upcoming weeks. Stay tuned for more updates on how these factors could affect your finances and investments.