European FX Open - All Eyes On Powell

The USD has been under pressure for much of the week as players gear up for Powell's speech later on at the Jackson Hole convene, with only brief respite coming late yesterday after the US flash composite PMI for August fell slightly to 54.1 from 54.3, but was above the 53.2 estimate.

Any USD gains proved limited however, given the closely watched employment component fell to 48.9 from 51.6 in July.

UEDA now takes the floor with some fairly balanced comments from parliament, noting that the BOJ can adjust rates if the economy moves in line with the outlook.

The YEN is thus a touch higher as Ueda signals that rates can go higher. He adds that GDP and wage data confirmed that the economy is in line with the BOJ's view.

Note, fast money funds initiated long yen positions during Ueda's speech.

Inflation figures from Japan aided the move after consumer prices excluding fresh food climbed 2.7% y/y vs 2.6% y/y in June, with the stickiness in core inflation pointing to the likelihood that the BOJ will continue to consider further rate hikes.

Also overnight, NZ’s Q2 real retail sales figure fell into contraction at -1.2% q/q vs the -0.9% estimate. Q1 was revised to +0.4% from +0.5% previously.

UK Aug GfK Consumer Confidence came in at -13 vs the -12 estimate.

This morning in Europe, the ECB will release its one- and three-year CPI expectations, with the former expected to fall to 2.7% from 2.8%, while that for three year is seen steady at 2.3%.

France's Aug Business and Manufacturing and Confidence is also due this morning, as well as Sweden's July Unemployment Rate and Norway's July Credit Indicator Growth.

US data includes new home sales for July and the Kansas City Fed services activity print for August.

Canadian data comes courtesy of the June retail sales report.

POWELL is the highlight however, and is largely expected to hint at a rate cut at the September FOMC meeting.

BOE Governor Bailey will also be speaking from Jackson Hole.

Other Fedspeak includes Bostic, Harker and Goolsbee (latter after hours).

---- Subscribe to read more ----

To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.