Markets Focus On Jackson Hole
Swissquote Bank Ltd | Aug 26, 2016 03:34AM ET
There we go, it’s Friday and we’ll finally get Janet Yellen’s thinking about the eventuality of an interest rate hike. The market has been increasingly impatient to hear what the Federal Reserve Chairwoman has to say: will she or not join her voice to the other Fed members and prepare the market for a tightening move? Looking at US treasuries and fed funds futures , it seems that investors are turning slightly more hawkish as the 2-year yields continued to trade within its uptrend channel, while the probability extracted from the fed funds futures showed that the chance a September move rose to 32% yesterday. However, the FX market seems far less hawkish as the US dollar has been under pressure over the last few days. On Friday in Asia, the dollar index fell 0.25% to 94.54 as the greenback fell 0.16% against the single currency, 0.20% against the pound sterling and 0.14% against the Japanese yen.
After falling as low as 1.1245 on Wednesday, EUR/USD returned above the 1.13 threshold. However, investors has been reluctant to increase their long EUR positions ahead of early September ECB meeting. Indeed, many expects the European central bank to increase stimulus to boost growth and inflation.
As usual when uncertainty increases, the Swiss francs rises. USD/CHF was the best performer amongst the G10 complex as it fell 0.23% to 0.9653 in Tokyo, after hitting 0.9688 in Wall Street yesterday. Over the medium-term, the currency pair continue to trade within its downtrend channel as it failed several times to reverse momentum. On the upside, a first resistance can be found at around 0.97, while on the downside the closest resistance area can be found at around 0.96, then 0.9537 (low from August 18).
In the equity market, Asian regional indexes are trading in negative territory and will most likely close in red for the second straight day. In Japan the Nikkei and the Topix index were down 1.18% and 1.23% respectively. In mainland China, the CSI 300 edged down 0.08%. In Australia, the S&P/ASX 200 was off 0.48%, while in New Zealand the NZX was down 0.48% as well. In Europe, equity futures are pointing toward a lower open. Yesterday European equities were trading broadly lower. Brace yourself for another tough day. However, Janet Yellen’s speech later today (CEST 4:00pm) could provide a fresh boost… or trigger another sell-off.
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Today traders will be watching GDP from France; retail sales from Spain; GDP from UK and the US; personal consumption, Michigan sentiment index, core PCE and Yellen’s speech from the US.
Currency Tech
EUR/USD
R 2: 1.1616
R 1: 1.1428
CURRENT: 1.1287
S 1: 1.1046
S 2: 1.0913
GBP/USD
R 2: 1.3534
R 1: 1.3372
CURRENT: 1.3225
S 1: 1.2851
S 2: 1.2798
USD/JPY
R 2: 107.90
R 1: 102.83
CURRENT: 100.52
S 1: 99.02
S 2: 96.57
USD/CHF
R 2: 0.9956
R 1: 0.9775
CURRENT: 0.9662
S 1: 0.9522
S 2: 0.9444
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