Markets Await Jackson Hole Symposium

The Canadian dollar strengthened over 0.4% against the pound as CPI picked up from 1.0% to 1.2%. Eurozone Construction Output had limited impact on the euro. Sterling-euro met resistance at 1.1000 following morning gains, and sterling-dollar briefly regained 1.2900 before heading lower. Euro-dollar held above 1.1700.

Previous Day's Market Highlights

The Canadian dollar strengthened over 0.4% against the pound as CPI picked up from 1.0% to 1.2%. Eurozone Construction Output had limited impact on the euro. Sterling-euro met resistance at 1.1000 following morning gains, and sterling-dollar briefly regained 1.2900 before heading lower. Euro-dollar held above 1.1700.  
 
US Consumer Confidence rose more than expected in August, according to preliminary data. Fed Member Kaplan spoke on economic growth. In recent comments on the possibility of a third rate hike this year, Kaplan has taken a more dovish tone given softer inflation.  
 
Following the previous week’s fears of an impending nuclear war with North Korea, US political drama and a terrorist attack in Barcelona prompted renewed risk aversion last week.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.0951 1.1248 1.0930 2.83%
GBP / USD 1.2854 1.3272 1.2832 3.32%
EUR / USD 1.1738 1.1912 1.1612 2.52%
GBP/AUD 1.6227 1.6743 1.6187 3.32%
GBP / NZD 1.7583 1.7929 1.7398 2.96%
GBP / CAD 1.6196 1.6727 1.6134 3.55%

Today's Market Highlights

A quiet calendar starts off the day with Canadian Wholesale Sales and the Chicago Fed National Activity Index (13:30 BST), neither likely to be a major market mover.
 
Looking further ahead this week, highlights for the pound include preliminary Q2 GDP and Business Investment estimates. Growth in Q1 was revised up from 0.2% to 0.3% in later estimates.
 
Central bankers meet at the Jackson Hole Symposium on Friday. Traders had speculated that ECB President Draghi might directly address the winding down of QE, any mention of which could strengthen the euro. However, last week an ECB source said that Draghi would not do so. Draghi may also face questions on the ECB’s concerns about the euro’s strength and potential to overshoot.
 
Fed Chair Yellen’s comments will also be in sharp focus as the Fed looks to unwind its balance sheet and as US inflation softens, which has cast greater doubt over the odds of a third rate hike this year. According to the CME FedWatch Tool, markets are currently pricing in less than a 50% chance of a hike in December. 

Today's Economic Calendar

Time Currency Release Consensus Previous
13:30 USD Chicago Fed National Activity Index (Jul) 0.13
13:30 CAD Wholesale Sales MoM (Jun) -0.4% 0.9%