Financial markets look to release of Fed minutes and Powell’s speech on Friday
Peter Compton " | August 20, 2019
The US dollar again touched year-to-date highs vs. a basket of currencies in overnight trading while some investors sought haven investments like US Treasuries, the Japanese yen and the Swiss franc. Tomorrow’s release of last month's Fed meeting will be scrutinized for indications on the potential magnitude and timing of the Fed’s next rate cut. Friday, Fed Chair Powell will speak at the annual Jackson Hole meeting of central bankers.
August 20, 2019
EUR/USD 1.1071 GBP/USD 1.2088 USD/CAD 1.3336 AUD/USD 0.6775 USD/JPY 106.28 USD/CNH 7.0725 USD/ILS 3.5297 USD/MXN 19.7948 USD/CHF 0.9804 USD/INR 71.7100
A lack of economic data and the upcoming Fed comments left market participants on the sideline as the US dollar remains near highs for the year. Trump is headed to France this weekend for the annual G7 meeting with the markets awaiting any comments on trade between the EU and US.GBP
The pound drifted lower as FX markets watched UK officials banter about the Irish backstop. UK Parliament returns September 3rd with little progress on Brexit negotiations expected, leaving political measures in the UK as the markets' last hope for a soft Brexit, an extension to Article 50 or a second referendum.EUR
The euro remains near one-year lows as FX traders focus on the Fed, a possible German recession, and a growing political storm in Italy. The G7 meeting in France this weekend is not scheduled to specifically discuss trade, but will likely produce sound bites that are anticipated to be negative for markets.CAD
Canadian data on manufacturing sales came in less negative than expected, but the loonie lost vs. the US dollar as FX traders focused on upcoming Fed comments. The oil price was flat as commodities in general continue to remain at recent lows.ASIA/PACIFIC
The Aussie dollar remains near 10-year lows after minutes from the Reserve Bank of Australia’s August meeting suggested the central bank was not in a hurry to cut rates again.
China lowered its lending reference rate in the first publication of a new benchmark since new interest rate reforms were announced on Saturday.
The Japanese yen gained on safe haven buying in front of Fed minutes tomorrow and Powell’s speech on Friday.