Search
Close this search box.

Explore the world.

Assess underlying fundamentals and market conditions in the world's major economies.

Americas

Stay ahead.

Follow the biggest stories in markets and economics in real time.

Connect with us.

Learn more about Corpay Cross-Border and the currency research team.

Subscribe

Get insight into the latest trends and developments in global currency markets with breaking news updates and research reports delivered right to your inbox.

After signing up, you will receive regular newsletters from Corpay, and may unsubscribe at any time. View Corpay’s Privacy Policy

Market Briefing: Expectations for Jackson Hole Ramp Up Amid Late-August Trading Lull

With anticipation building in markets ahead of Jerome Powell’s speech in Jackson Hole on Friday, the dollar is trading near a five-week high, short term Treasury yields are up, and equity futures are tumbling. Investors expect the Federal Reserve chair to tilt against the recent loosening in financial conditions, emphasizing the central bank’s willingness to hit the economic brakes as it works to bring inflation under control.

But “there is no terror in the bang,” as Alfred Hitchcock put it, “only in the anticipation of it”. Mr. Powell will almost certainly acknowledge signs of slowing economic momentum and is unlikely to deliver specific guidance ahead of the September meeting – meaning that his message could prove insufficiently shocking for well-prepared markets, making a dovish correction increasingly likely.

Raw materials prices are up and the Australian dollar is climbing after China’s biggest commercial banks cut benchmark interest rates. The move to lower household and business borrowing costs was widely anticipated – the People’s Bank of China last week led in slashing two of its key rates – but a 15 basis-point drop in the five-year loan prime rate was more than expected. Policymakers are trying to ease a cash crunch and revive moribund credit demand, but broader economic uncertainties are mounting.

Oil benchmarks are oscillating between gains and losses as talks on an Iranian nuclear deal progress. US President Joe Biden “discussed ongoing negotiations over Iran’s nuclear program, the need to strengthen support for partners in the Middle East region, and joint efforts to deter and constrain Iran’s destabilizing regional activities,” with European leaders according to a White House readout on the weekend. If a deal is agreed, Iran is expected to ramp up production and help ease global energy shortages.

Today’s data calendar is light. Tomorrow’s new home sales and Wednesday’s durable goods orders are likely to point in opposing directions, with the housing market slowing even as underlying consumer demand remains strong.

Another US inflation measure is expected to show signs of cooling on Friday, with the July personal consumption expenditures report likely to bring evidence of an easing in headline and core measures. Personal income is seen growing at the same pace as in the prior month, and real spending probably climbed slightly.

Karl Schamotta, Chief Market Strategist

Will the positive vibes last?
Markets Recover As Geopolitical Risk Premia Evaporate
Sentiment swings
Israeli Strike Triggers Short-Lived Volatility Spike
Dollar Juggernaut Slows, But Remains Powerful
Higher for (even) longer