The Stage is Set for Jackson Hole Symposium 2016
Let the curtains rise! There is no bigger stage for global central bankers than the annual Jackson Hole Symposium. Central bank governors from across the world will converge today at Jackson Hole in Wyoming to discuss how they can emerge from the deep economic black hole that seems to get more mysterious and murkier with every possible move. Central banks across the globe have tried implementing every plan in the book, they have slashed the interest rate to zero and beyond, pumped trillions into the nation’s financial system, but to no avail. Therefore, this year’s topic “Designing Resilient Monetary Policy Frameworks for the Future,” stands apt for the current scenario.
Apart from this, there are a few economic releases today. In the Eurozone, Germany’s Ifo business climate index unexpectedly fell to a four-month low level in August. In the US, weekly jobless claims and the services PMI are up for release later in the day.
Pound Sterling – UK Markets
The Pound has reversed its previous session gains and is trading lower against its major peers this morning. The Confederation of British Industry’s (CBI) distributive trades survey data for August is the sole economic release in the UK today. This indicator depicts short-term trends in the British retail and wholesale distribution sector. Last month, the index had plunged to its lowest reading since January 2012, as retailers and wholesalers were in a sour mood after the shock Brexit vote. The August reading is expected to record another decline. Looking further ahead, the preliminary reading of the UK’s second quarter GDP data will be out tomorrow.
Yesterday, Sterling ended on a stronger footing against the greenback and the shared currency, despite some disappointing mortgage data. As per a report by the British Bankers’ Association (BBA), mortgage approvals for house purchases in the UK dropped to an eighteen-month low in July following Britain’s vote to leave the European Union.
US Dollar – US Markets
The greenback is trading mixed against the Euro and the Pound this morning, ahead of the Economic Policy Symposium at Jackson Hole, Wyoming later today. Investors also look forward to the highly anticipated speech by the Federal Reserve Chairwoman, Janet Yellen, tomorrow. Going forward, the US economic calendar contains two key updates – new orders for durable goods and the weekly initial jobless claims set to release later in the day. Additionally, the US preliminary Markit services PMI is expected to show a better performance in August, after the nation’s services sector expanded at the slowest pace in five months in July.
Yesterday, data showed that US existing home sales slipped more than expected in July after posting strong gains for four consecutive months amid lack of inventory for buyers. Meanwhile, house prices in the nation inched higher but remained below market expectations in June. Other data indicated that US MBA mortgage applications declined for the second time in a row last week.
Euro – European Markets
The shared currency is trading higher against the greenback and the Pound this morning. Data released earlier in the session showed that Germany’s Ifo business climate index surprisingly fell to a four-month low level in August. Moreover, the current assessment index unexpectedly dropped and the business expectations index, which measures attitudes towards business prospects over the next six months, unexpectedly deteriorated in August. In other economic news, the French business climate index marginally declined in August. In contrast, Spanish GDP grew at a faster rate than initially expected in the second quarter, driven by increased investment and an uptick in household spending.
Yesterday, the Euro dropped to a fresh one-week low against the US dollar after Germany’s final GDP print for the second quarter came in weaker compared to its impressive first quarter performance. Separately, the German Chancellor, Angela Merkel, urged the remaining 27 member countries of the Eurozone to make a judicious move and avoid rushing into policy decisions post Brexit.
Other Currencies – Highlights
The Swiss Franc is trading higher against the US Dollar this morning, recording its first rise in five days. Data released earlier in the session showed that Switzerland’s industrial production declined during the second quarter. Looking ahead, there are a string of significant economic data points lined up for release in Switzerland next week. This includes the nation’s real retail sales and the SVME - purchasing managers’ index - along with the UBS consumption and KOF leading indicator data.
Earlier this week, data showed that Switzerland's trade surplus narrowed to a three-month low level in July. Exports rebounded and imports logged a huge growth during the month. However, a separate report from the Federation of the Swiss Watch Industry FH indicated a double-digit decline in watch exports in July, thus highlighting the seemingly unassailable strength of the Swiss Franc once again. The largest decline in watch exports was to Hong Kong, which registered a drop for the 18th consecutive month.