Key notes:

USD weaker across the board despite US yields up

Cat 4 Hurricane Laura approaching Gulf Coast

Markets await Powell’s address at Jackson Hole

It seems one day up next day down for the USD as we head into the key event risk for the week. Powell is due to deliver his address at 1310GMT Thursday, so expect high levels of volatility around that time. The dollar was mostly lower against its key pairs despite US yields ticking higher throughout the day. The likely influence here is month end rebalancing against the USD, however EUR struggled to keep up with Cable and the commodity bloc currencies as further concerns around Covid cases left investors cautious. Italy has reported the highest number of new cases for almost 3 months. Metals once again were volatile with Gold falling to 1902 before bouncing to 1954 into the close, Silver was also up 3.39% on the day. NZD, CAD, AUD and Cable are all up against the USD testing key trendlines and if it continues would send further bullish signals to markets. All eyes on Powell now. The key for the next moves in markets is the wording around ‘average inflation targeting’ which if suggested could be a further boost for stocks and a weaker USD as it suggests the Fed are unlikely to raise rates anytime soon even if there were some signs of inflation exceeding 2%. Hurricane Laura has been stealing headlines with it’s velocity and potential damage so parts of the southern US are in their own lockdown and oil refineries remain closed. The better risk mood has seen the US indices continue to defy gravity with the Nasdaq putting in another 1.73% overnight an absolutely staggering bubble, but will it burst? Probably not yet! No data to excite the Asian session as we await US jobless claims data expecting another 1m gain, but the focus will be on Powell and if he is ‘dovish’ enough.

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