Ahead of tomorrow’s key event, markets remain watchful and prefer to wait
On Wednesday, risk-off returned to markets, which benefited the USD and dragged the most popular currency pair lower. Although there were some positive headlines concerning the COVID-19 vaccine in the UK, the markets’ attention is shifted towards Fed Powell’s speech on Thursday.
Tomorrow, at the Jackson Hole Symposium the US Federal Reserve Chair will deliver a speech and is expected to talk about key points of the Central Bank’s framework review. Some experts speculate that the FOMC will adopt average inflation targeting and thus will return to a higher inflation range of 2-2.5% when the economy is or near full employment.
If Powell confirms these speculations, it would induce some risk-on and thus weaken the US Dollar. However, for now ahead of the crucial event traders remain cautious and prefer waiting on the sidelines, which moved the DXY back to the green zone above the 93.00 mark. EURUSD, on the contrary, lost ground and dropped closer to the 1.18 mark.
As for the good news, the University of Cambridge got 1.9 million pounds in funding from the UK government and will start the COVID-19 vaccine tests in autumn. GBP, however, did not pay much attention to the reports as GBPUSD trades with daily losses in the 1.3140 region amid the USD strengthening.
Meanwhile, other majors such as USDCAD or USDJPY took advantage of the greenback’s rise across the board and witnessed some gains to the 1.3180 and 106.35 areas respectively. Gold sits comfortably near the $1.920 mark.
Today, in the NY session the US will publish the Durable Goods Orders for July and EIA Crude Oil Stocks Change. Also, BoC’s Wilkins and BoE’s Head Haldane will give their speeches. However, Thursday’s Jackson Hole Symposium steals the show as markets want to know more about further Fed’s monetary policy course.