US dollar slumbers at the start of the week

Dollar stays range-bound as Jackson Hole Meeting looms

Trading activity was subdued in the Asian session with most currency pairs confined to tight ranges with little on the data calendar to spur trading. The dollar, as measured against a basket of six currencies, had a marginal bullish bias, while USD/TRY was largely sidelined after a roller-coaster seven days as the country starts public holidays for the entire week.

USD/CNH rose for the first time in three days despite the People’s Bank of China setting a stronger yuan fix versus the dollar for the second straight day, possibly in an attempt to influence the exchange rate ahead of trade talks possibly later this week. USD/CAD consolidated Friday’s drop when inflation data heightened speculation of a Bank of Canada rate hike sooner rather than later.

Loonie rallies hard on inflation data

Business association says tariffs bad for US growth

In a semi-annual survey released today by the National Association for Business Economics, a huge 91% of respondents said that the current tariff wars would have an adverse impact on the US economy. At the same time, about two-thirds saw a negative impact if the US withdraws from NAFTA. The survey comes as both the US and China are scheduled to sit back down at the negotiating table later this month. On Friday the CEO of Maersk shipping line, the world’s largest, said the fallout from the tariff wars could have a greater negative impact on the US economy.

Economists more hawkish on BOE rate outlook

In the latest survey conducted by Bloomberg, economists expect the Bank of England to hike rates twice next year, bringing the base rate to 1.25% by end-2019. That’s 25 bps higher than in the previous survey conducted in July. The first of next year’s hikes is not expected until after a Brexit deal is concluded in March, possibly at the May meeting. GBP/USD showed little reaction to the survey, hovering at 1.2742, slightly below today’s opening price in quiet, subdued trading activity.

GBP/USD Daily Chart

Source: Oanda fxTrade

Aussie government popularity takes a hit

An opinion poll released this morning showed Malcolm Turnbull’s Liberal-National coalition slipping further behind the opposition Labor party in the popularity stakes. The Fairfax-Ipsos poll showed the gap widening 2% to 10%, 55% versus 45%, in favor of Labor. The Australian dollar maintained a slightly weaker bias during the Asian session, sliding 0.17% to 0.7302. That would mean the Aussie has snapped a three-day rising streak which helped it gain 1.45% versus the dollar since the low last Wednesday. The pair continues to be capped by the 55-day moving average, which is at 0.7413 today.

AUD/USD Daily Chart

Source: Oanda fxTrade

All eyes on Fed’s Powell at Jackson Hole Symposium

After a slow Monday, Tuesday (Asia time) sees a speech from RBA Governor Lowe and the release of minutes of the last RBA meeting while those of the Fed’s last meeting follow early Thursday morning (Asia time). The Kansas Fed’s Jackson Hole meeting kicks off on Thursday and lasts through Sunday with Fed chairman Jerome Powell scheduled to speak on Friday, with markets eager to hear if there may be any changes to the Fed’s dot plot rate outlook. Speeches from other central bankers could also grab the headlines but none are seen to be in such an aggressive hawkish position as the Fed.

This week’s full data calendar can be viewed here: https://www.marketpulse.com/economic-events/

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