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August 28th - Analysts and investors believe this speech will be an early test, observing whether Warsh is willing to adapt to an environment of growing concern about his policy plans. The Federal Reserve has now failed to achieve its inflation target for 65 consecutive months, and progress over the past year and a half has been very limited. Early in his tenure, Warsh repeatedly reiterated his commitment to achieving the Feds inflation target, but consistently failed to specify how, which has already sparked calls for the Fed to adjust its policy focus. EY-Parthenons chief economist, Gregory Daco, stated that Warshs previous statements have been very vague, and "people are worried about the Feds independence," as well as whether Warsh is reluctant to discuss potential interest rate hikes to avoid angering Trump and his administration. Daco said, "He has to be more careful in his communication, not giving the impression that the Fed might be coordinating and cooperating more with the Treasury, nor giving the impression that he is influenced by the presidents demands for rate cuts… These are not good signs for any new Fed chair." Warsh must carefully navigate his statements. Saying too much could trigger irreversible expectations, or at least make people uncomfortable; saying too little could damage credibility and hand over influence to other members of the Federal Reserve who can provide more detailed arguments. In either case, market volatility is likely.The Chicago PMI for August will be released in ten minutes.August 28 - The Russian Ministry of Defense announced today (August 28) the successful test launch of an intercontinental ballistic missile.According to the Islamic Republic News Agency (IRNA), Iran and Russia have eased travel restrictions for business travelers and truck drivers.Federal Reserves Hamack: We dont know much about the economic impact of the balance sheet.

EUR/USD approaches 1.00 despite a potential German energy crisis; Jackson Hole forecasts a pullback

Daniel Rogers

Aug 25, 2022 14:59

截屏2022-08-25 上午10.23.25.png 

 

The EUR/USD has detected buying activity after trading sideways at 0.9960 throughout the Tokyo session. As the US dollar index (DXY) trades badly at the open, the pair is climbing to reclaim the fabled 1.0000 level. The DXY has fallen to approximately 108.50 after experiencing selling pressure close to 108.50.

 

The contrasting reactions of market players to Federal Reserve (Fed) chair Jerome Powell's remarks on interest rate guidance at the Jackson Hole Economic Symposium have perplexed investors. The DXY is volatile due to two schools of thought regarding the Fed's stance on interest rates following a decline in the private sector.

 

As a result of the Fed's aggressive interest rate rises, PMI numbers have decreased dramatically. As a result, one school of thought contends that the Fed should slow down because a decline in economic activity could hurt the confidence of the private sector. In addition, the second school of thought favors maintaining the existing rate of interest rate hikes, as price stability is the primary objective.

 

On the Eurozone front, the probability of a German energy crisis is rising as the energy-supplying Nord Stream 1 pipeline from the Baltic Sea to Germany undergoes unscheduled maintenance over the last three days of August. During a time when the German energy market is already suffering supply difficulties, new supply constraints may cause energy prices to skyrocket.


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