Jackson Hole: Fed's Powell to Give Final Push?

AUD

The Aussie dollar has lost ground against most majors overnight despite solid performance among commodities & strong risk sentiment in the Asian equity session. The ASX closed up +0.5%, Nikkei up +0.8% and the Hang Seng up 2.0%, while Iron Ore and Cotton gained +0.4% and +0.3% respectively. No Aussie data yesterday or today, while next week kicks off with a bang: monthly Retail Sales on Monday, RBA Governor-Designate Bullock speaking on Tuesday and CPI y/y figures on Wednesday. All three key events have the potential to shift the AUD.

USD

AUDUSD peaked at 0.6487 in yesterday’s early afternoon before steadily declining to open at 0.6417, while risk sentiment soured overnight and saw the NASDAQ close -1.9%, S&P 500 -1.4%, and the Dow Jones -1.1%. Yesterday’s US Unemployment Claims data declined by 10,000 to a seasonally-adjusted 230,000 in August, while monthly Durable Goods Orders inched up in July, suggesting business spending on equipment could continue to grow after rebounding in the 2nd quarter. The data highlights the question markets face ahead of Fed Chair J Powell’s talk at the US Central Bank’s annual Jackson Hole Symposium: How long will it take for the Fed to declare victory over inflation & begin to cut interest rates? Notably, Fed Boston President Collins indicated the central bank may need to raise the benchmark interest rate further & that she wasn’t prepared to signal the peak point. No data today, while late this evening the Revised UoM Consumer Sentiment index is expected to remain unchanged at 71.2. Numerous Fed Members speaking in Jackson Hole tomorrow, including J Powell who is expected to give a (final?) push in the inflation fight.

EUR

AUDEUR remains near 2-week highs despite giving back some recent gains overnight to open at 0.5934. European equities also lost ground with the DAX -0.7% and CAC -0.4%.  Zero data yesterday and nothing on the table today ahead of tonight’s German ifo Business Climate report (light contraction expected to 86.8). If far from expectations, we may see volatility in the AUDEUR pair near 6pm. Tomorrow morning, ECB President Lagarde will be speaking at the annual Jackson Hole Economic Symposium in Wyoming, USA. We haven’t heard a great deal from her recently, but markets are quickly losing confidence that the central bank will be able to squeeze in another interest rate hike before the drop in Eurozone activity closes the door on its tightening cycle.

GBP

AUDGBP opens relatively flat at 0.5088 after last night’s CBI Realised Sales data failed to move markets. The report indicates UK retail sales fell in the year to August for a fourth consecutive month, and at the highest rate since March 2021, with further contraction expected next month. No noteworthy UK data for the remainder of the week. Also, UK Banks will be closed on Monday in observance of the Summer Bank Holiday.

NZD

AUDNZD has given back all gains made in the past 24h to open at 1.0836, being slightly down from yesterday morning. No data from our Kiwi friends in the near term with only 2 pieces of low[1]tier data next week (monthly Building Consents and ANZ Business Confidence).