August 21-August 25 Market Overview: This week's economic data is relatively light. Before the Jackson Hole Global Central Bank Annual Meeting, the financial market was dominated by geopolitical factors, especially the US President Trump's mouth. The "cannon" mode was reopened, causing investors to have a full-blown outflow of risk aversion. The US dollar oscillated down during the week, while safe-haven assets such as the euro, the yen, the Swiss franc and gold once rose. However, the real highlight is still behind. With the annual meeting of Jackson Hole Global Central Bank, the heavyweight officials Federal Reserve (Fed) Chairman Yellen and European Central Bank (ECB) President Draghi’s speech both made investors stunned. , causing violent market volatility.
Before Yellen’s speech, the speeches of two Fed officials incited the nerves of the market, and the spot gold short-term performance plunged and plunged. Subsequently, Yellen did not mention the monetary policy in his speech, which caused the dollar to plunge in a short-term, and the gold bulls made a comeback.
Yellen did not mention monetary policy in his speech at Jackson Hole's annual meeting. Instead, he focused on the history of the crisis and the responses of regulators, but she mentioned that the Fed made substantial progress on both the price and employment goals.
Then "Super Mario" Draghi also made a big debut. As always, the "big mouth" president once again gave the market a slap in the face, saying that he was full of confidence in the global economic recovery, which made the original It is expected that the investors in this meeting will not be able to “smoke the splashâ€. After the boost of Yellen’s speech, the euro/dollar rose again and further increased to a new high of 1.1940 since January 2015. However, the US dollar suffered a "two-battery". Yellen’s speech has already caused the dollar to fall. After the Draghi speech, the US dollar index fell further and fell to a low of 92.47 since May 2016.
In terms of commodity currency, influenced by Yellen’s speech, the AUD/USD surged overnight, refreshing the high of 0.7953 since August 17, and then continued to fluctuate at a high level.
In commodities and stocks, on Friday (August 25th), international spot gold rose after Fed Chair Yellen’s speech, reaching a maximum of $1,293.98 per ounce. Before and after Yellen’s speech, the price of gold went from flash to burst, with an amplitude of more than $20. At the same time, international crude oil recorded a weekly decline. On Friday (August 25th), US WTI crude oil October futures closed up 0.44 US dollars to 47.87 US dollars / barrel, down 1.6% this week. Brent crude oil October futures closed up 0.37 US dollars to 52.41 US dollars / barrel on Friday, down 1.4% this week.
This week's news checklist:
Yellen doesn't mention monetary policy. The dollar plunges into gold and sits on a "roller coaster."
On Friday (August 25th), before and after the well-respected Federal Reserve (Fed) Chairman Yellen’s speech, the financial market set off a giant and took a crazy “roller coaster†in the short term. Before Yellen’s speech, the speeches of two Fed officials incited the nerves of the market, and the spot gold short-term performance plunged and plunged. Subsequently, Yellen did not mention the monetary policy in his speech, causing the dollar to fall sharply and the gold bulls to make a comeback.
Looking back at the decade after the financial crisis, Federal Reserve Chairman Yellen said on Friday that although some adjustments may be needed, the current financial system is safer than ever.
Yellen did not mention monetary policy in the much-anticipated speech of Jackson Hole, but focused on the history of the crisis and the responses of regulators, but she mentioned that the Fed made substantial progress on both the price and employment goals. Yellen warned that the future crisis is inevitable, but said that the housing crisis has given us a valuable lesson.
Yellen pointed out in a prepared speech that "crisis requires us to take action and we have implemented the reforms we need to make the system more secure."
Yellen refuted the idea that regulation has curbed banking activity and insisted that higher capital requirements would drive loan growth.
Fed observers have been looking for Yellen’s views on the Fed’s response to the crisis, which is the focus of his speech. She cited the need to put the bailout plan in place to deal with the decline in Wall Street liquidity and to peddle the effectiveness of the new regulations since implementation, such as the Dodd-Frank reform.
The consultant of the investment company Kisco Capital said that Yellen’s speech seems to be paving the way for his resignation.
CNBC senior economic journalist Liesman pointed out that Fed Chair Yellen’s defense of financial reform at the Jackson Hole meeting further reduced the possibility of Trump’s re-appointment.
After Yellen’s speech, the US dollar index plunged 60 points in the short-term, falling below 93, and refreshing the new low to 92.72 since August 4. The euro/dollar rose nearly 110 points in short-term, to a three-week high of 1.1884. USD/JPY fell nearly 90 points to a one-week low of 109.09.
Chris Low, chief economist at FTN Financial, said that Yellen apparently repeated a week before the annual meeting of Jackson Hole Global Bank. In particular, Yellen has avoided the occasion of using Foxson to comment on FOMC monetary policy. Yellen believes that it is not appropriate to declare policy changes outside the Fed's routine monetary policy meeting.
The French Agricultural Credit Bank pointed out that after Yellen’s speech, the euro/dollar was ready to test 1.20.
But analysts warned the euro to be bullish, because Draghi apparently did not want the euro to be too strong, and if Draghi swears in the subsequent speech, the euro is under pressure. The euro is currently rising to a one-week high, with an important resistance at 1.19.
In addition, after Yellen’s speech, the international spot gold rose in a short-term, with a maximum break of $1,290 per ounce.
Draghi’s confidence in the economic recovery is full, and the euro’s violence has risen and the dollar has suffered a “two-shotâ€
European Central Bank President Mario Draghi pointed out at the main central bank governor meeting in Jackson Hole on Friday (August 25) that the global economic recovery is growing.
Draghi said that without a strong potential economic growth, the cyclical recovery we are experiencing will eventually slow down. To inject more energy into the global economy, we must drive the growth of potential output.
Draghi pointed out that the openness of trade is under threat, and the shift to protectionism poses a serious risk to the continued growth of productivity and the potential growth of the Hong Kong stock market in the 00001 global economy.
After Draghi’s speech, the euro/dollar violence rose and further rose to a high of 1.1940 since January 2015.
At the same time, the US dollar index hit a low of 92.47 since May 2016, and the day fell by more than 0.8%. The US dollar continued its decline since Yellen’s speech, and the bulls were brutally beaten by the heads of European and American central banks.
At the same time, the CBOE Volatility Index reduced its decline and fell 0.84 points to 11.39.
Before Draghi's speech, some market participants expected that Draghi might use Jackson Hall to hint at when the European Central Bank will start tightening monetary policy by reducing the size of its bond purchases. But in his speech on Wednesday, he did not comment on how the central bank will adjust its policy as the eurozone economy is improving.
The financial website Forexlive wrote that the European Central Bank President Mario Draghi’s speech was generally optimistic, directly raising the euro/dollar to a one-and-a-half-year high.
Zerohedge said that Draghi’s confidence in the European economic recovery is high, and his comments have lifted the euro to suppress the dollar.
Prior to Draghi's speech, Kathy Lien, managing director of BK Asset Management, wrote on Thursday (August 24th) that in the past 72 hours, a number of ECB officials appeared to be using every opportunity to deliver hawkish messages. Among them is the European Central Bank, Schaeuble, who said on Thursday that the central bank should tighten policy earlier rather than later. Hansen of the European Central Bank also played down the fact that the euro zone rose 13% this year, saying that the euro's gains are not a major change. Prior to this, Weidmann said that he believes that "there is no need to extend QE before 2018."
Societe Generale also said that if Draghi mentions reinflation or any rhetoric that suggests a reduction in QE, we will think that the euro may rise.
Next week, the long-term uptrend line of EUR/USD is around 1.1660, which is also the lowest level in the past 4 weeks, meaning that as long as this level does not lose its long position, it will not surrender. In the middle of this process, this week's low of 1.1730 is the first support that needs attention next week.
Trump opens the market and shakes three shakes.
On Wednesday (August 23), Trump once again opened the "mouth gun" mode, published an astonishing remark that "even if the government closed the door and built a border wall" and threatened to end the North American Free Trade Agreement (NAFTA) with Mexico and Canada. This caused the market's risk aversion to break out, the US dollar plummeted, and safe-haven assets such as the euro, the yen, the Swiss franc and gold rose sharply, with spot gold helping to break through the $1,290/oz mark.
The US dollar index fell to a low of 93.19 on the day, reversing the strong trend of the previous trading day.
On Tuesday, Politico reported that President Trump’s senior aides and congressional leaders were buying support after the tax reform plan progressed. But the momentum quickly faded, because Trump told supporters at a rally in Arizona, "Even if we have to close the government, we must build that high wall."
Traders are looking forward to getting more monetary policy clues from the Jackson Hole Global Central Bank Governors' Annual Meeting as they assess the threat of a temporary lock-up by the federal government. Federal Reserve Chairman Yellen and European Central Bank President Mario Draghi’s speech have received much attention.
According to Charalambos Pissouros, senior analyst at Tiehui, “However, in our view, the potential lockout may further reduce the tax reform expectations. It once again highlights the split between the White House and Congress, suggesting that if the two sides cannot agree on the budget, then the complex Tax reforms are unlikely to be realized."
In addition, Trump warned on Tuesday that it might end the North American Free Trade Agreement (NAFTA) with Mexico and Canada, and the previous negotiations between the three parties failed to bridge serious differences.
The United States, Canada and Mexico ended the first round of negotiations aimed at revising the trade agreement on Sunday, with few signs of breakthrough progress. Trump, on the grounds of damage to the US economic interests, called for the resumption of negotiations on this agreement, which came into force in 1994.
Trump said in a political rally in Phoenix, Arizona, "I personally don't think we can reach an agreement, and eventually it is possible to end NAFTA at some point."
Implying that the final agreement may help push the negotiations, Trump said, "I personally think that if the agreement is not finalized, it will not be possible to reach an agreement."
After Trump made the above remarks, Mexican Foreign Minister Luis Videgaray said in a tweet, "This is not an accident. We are already negotiating. Mexico will stay calmly at the negotiating table and will put national interests first. â€
The three parties issued a joint statement at the end of the five-day negotiations in Washington. Trade officials from the three countries said that Mexico will host the next round of negotiations on September 1-5.
Negotiations after September will be transferred to Canada and will return to Washington in October, and more rounds of negotiations may be held later this year.
Jane Foley, senior foreign exchange strategist at Rabobank, pointed out that “the president does have more autonomy on trade issues than financial issues, so there is a risk of withdrawing the negotiations. Continued negotiations may indicate that the agreement will not stop.â€
Long burst? The dollar rebounded across the board and North Korea broke out again.
At the time of the global attention to the annual meeting of the Jackson Hole Global Central Bank, the dollar bulls broke out ahead of schedule? On Tuesday (August 22), the US dollar rebounded across the board, with the euro, the yen and the pound sterling all “falling downâ€. Market analysts point out that the dollar's short position has fallen, and investors have bought dollars for profit-taking or bargain hunting. At the same time, on the day of the US-South Korea military exercise, North Korea made another warning! According to foreign media reports, the US military commander plans to issue a warning to North Korea at a press conference later today. The Korean Peninsula crisis is coming back!
During the European session on Tuesday, the US dollar rebounded across the board, and the US dollar index rose to 93.51, which is expected to end the decline in two consecutive trading days. European traders said investors are making more dollars for profit-taking or bargain hunting.
HSBC wrote that it is expected that short-term dollar short positions will continue to decrease. According to Reuters, CFTC's latest position data shows that as of August 15th, speculative dollar short positions recorded a decrease of 21,957 hands, ending 7 weeks of continuous increase.
The bank said that the Federal Reserve will not decide whether to raise interest rates until December, and there will be no new catalyst in the financial sector. The US budget and debt ceiling have not yet affected the US dollar, so the US dollar is expected in the future. It will grow moderately during the week.
In addition, HSBC said that the US dollar suspended its depreciation trend in August, indicating a decrease in short positions. It is expected that the US dollar index will rise above 95.25 of the 50-day moving average.
After attending the conference last year, the Fed has raised interest rates three times and hinted that it will begin to reduce its balance sheet in the coming months.
Federal interest rate fund futures show that traders bet that the Fed’s probability of raising interest rates in December is only 42.5%. Some analysts pointed out that the market may underestimate the Fed's willingness to raise interest rates in the future, and does not rule out the possibility that Yellen will take the opportunity to correct this.
Next week's market outlook:
This week's economic data is relatively light, but Federal Reserve (Fed) Chairman Yellen and European Central Bank (ECB) President Draghi's speech at the annual meeting of Jackson Hole Global Central Bank has caused investors to stun and financial markets fluctuate wildly. Next week will also usher in a series of heavy economic data, including the highly anticipated US non-farm payrolls report for August. The performance of this data will directly affect the future market expectations of the Federal Reserve (FED) monetary policy, which in turn affects the US dollar and gold. Market trends, investors will wait and see.
Next Monday (August 28), the US will release July wholesale inventories and the August Dallas Fed manufacturing index. On Tuesday (August 29), Japan will announce the unemployment rate in July. France will announce the initial value of GDP in the second quarter. The US will announce the Consumer Confidence Index for the August Conference. On Wednesday (August 30), Japan will announce July seasonally adjusted retail sales. The US will announce August ADP employment changes and PCE corrections in the second quarter and real GDP revisions in the second quarter. On Thursday (August 31), China will announce the official manufacturing PMI for August. Australia will announce private new capital expenditures for the second quarter. Germany will announce the August seasonally adjusted unemployment rate. The euro zone will announce the initial CPI for August. In July, the unemployment rate, Canada will announce June GDP, and the United States will announce July personal income and consumer spending. On Friday (September 1), France and the Eurozone will announce the final value of the August Markit/CDAF manufacturing PMI. The US will announce the August non-farm report, the July construction spending, and the final value of the University of Michigan consumer confidence index in August. August ISM manufacturing PMI and other series of heavy data.
In terms of central bank dynamics, next Tuesday (August 29), Chicago Fed President Evans will deliver a speech.
In addition, on holidays, next Monday (August 28th), the UK will be closed for holidays due to summer bank holidays.
Important economic data and events next week:
Monday (August 28):
Economic data:
16:00 Italy August Istat Consumer Confidence Index
20:30 US July wholesale inventory
22:30 US Dallas Fed Manufacturing Index in August
Holiday preview:
UK Summer Bank Holiday Holidays Closed
Tuesday (August 29th):
Economic data:
07:30 Japan's unemployment rate in July
Japan’s all household expenditures in July
Japan seeks job search ratio in July
14:00 Germany September GfK Consumer Confidence Index
14:45 France's second quarter GDP initial value
22:00 US August Chamber of Commerce Consumer Confidence
Central Bank News:
23:00 Chicago Fed President Evans opens his speech at the bank's large bank executive meeting
Wednesday (August 30):
Economic data:
07:50 Japan July retail sales
Japan's July seasonally adjusted retail sales
09:30 Australia's July seasonal private construction permit
16:30 UK central bank mortgage loan changes in July
17:00 Italian producer price index in July
Eurozone August Economic Climate Index
20:00 German August consumer price index at the beginning
20:15 US ADP employment changes in August
20:30 US second quarter PCE correction
US second quarter real GDP revision
Central Bank News:
Bank of Mexico announces quarterly inflation report
Financial events:
21:15 Fed Governor Powell speaks at a large bank executive meeting hosted by the Chicago Fed
Thursday (August 31)
Economic data:
09:00 China August official manufacturing PMI
China's official non-manufacturing PMI in August
09:30 Australia's second quarter private new capital expenditure
14:45 French initial consumer price index in August
15:55 Germany's August seasonally adjusted unemployment rate
17:00 Eurozone August consumer price index initial value
Eurozone July unemployment rate
20:30 Canada June GDP
US personal income in July
US personal consumption expenditure in July
US July Consumer Expenditure Price Index
20:00 US July NAR seasonally adjusted housing contract sales index
Central Bank News:
09:30 Bank of Japan Review Committee member Masaru Kenji delivers a speech
15:00 Swedish Central Bank Executive Committee meeting
Bank of Korea announces interest rate decision
Financial events:
11:00 Sarah Harris, Deputy Head of Infrastructure and Payment Policy, Financial Markets, RBA, participates in the 2017 Australia Risk Conference
Friday (September 1):
Economic data:
07:00 South Korea's second quarter real GDP final value
08:00 South Korea August trade account
08:30 South Korea August manufacturing PMI
15:50 French August Markit/CDAF manufacturing PMI final value
16:00 Eurozone August Markit Manufacturing PMI Final Value
20:30 Changes in non-agricultural employment in the United States in August
US unemployment rate in August
22:00 US July construction expenditure
US August ISM Manufacturing PMI
US August University of Michigan Consumer Confidence Index Final Value
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