Trading Week Ahead: 24th – 29th August 2020
Key Events and Data Releases This Week
NZD Retail Sales
USD Fed Chair Powell Speaks
CAD BOC Gov Macklem Speaks
All Day Jackson Hole Symposium
GBP BOE Gov Bailey Speaks
All Day Jackson Hole Symposium
(Times adapted to AEST timezone)
Last week’s wrap
Risk majors started the week with further rallies, as the AUDUSD hit .7275, the EURUSD 1.1966, and the GBPUSD 1.3267. Buyers held the reins until midweek at which point some rejection began to kick in. This continued late into the week as sellers picked up the action, heavily targeting the EUR as it saw solid falls into Friday’s London session. Gold also followed suit, moving higher until hitting the buffers Wednesday when it saw a sharp sell-off with 3.36% shaved off its value, and ultimately killing the fightback rally that had kicked off the week. This all got going after the FOMC meeting minutes, which seemed to suggest further policy measures without any real details. One of the things that announced within the meeting was that rates will remain low, which has been seen as useful after the 2008 Global financial crisis and recession.
Either way, the U.S. dollar saw demand out of all this with gains continuing late last week to risk majors. The EURUSD was hit on both sides last Friday as the USD saw demand and services and manufacturing data out of Europe proved to be disappointing. The data showed a slowing of the previous expectation with French and German services data both falling below expectations. German manufacturing did see an increase but it was outweighed by the previous and total EU data falling. EU flash services came in at 50.1, well below the 54.6 expected.
Despite UK data beating expectations the GBP saw heavy selling to the USD and JPY into Friday European session. Brexit remains on the radar with worries continuing around a future deal. September is just around the corner traders. Stocks saw a flat week, but the Nasdaq did manage to hit a new record close and the S&P500 did touch new records in the out of hours. Attention could still be focused on new and ongoing stimulus. The proposed 1200 checks still remain locked in congress. Iron ore hit new multi year highs as demand grew on infrastructure investment.
Oil tested $43 briefly during the week before weakening late in the week. OPEN meetings concentrated on reining in member nations oversupplying. Reuters reported that OPEC+ found some members would need to cut output by 2.31 million barrels per day to make up for their recent oversupply.
This week, U.S. preliminary GDP is due, and the attention will remain on U.S. unemployment claims, which came in higher than expected last week. Fed Chairman Powell is also scheduled to speak on Thursday. Overall, I think the most focus will be on the Jackson Hole Symposium, which runs over two days, Friday and Saturday at Jackson Hole, Wyoming. Around 120 delegates will attend, which includes roughly 45 central banks and 25 from the FED. With the U.S. economy in the sharpest downturn since the 1930s and unemployment at 10.2%, the question is will we see any policy shifts?