Last saw more falls in the DXY from recent highs. CNY and EUR rebounded:
AUD was up against DMs:
And EMS:
Gold was off lows:
Oil too:
And base metals:
Plus big miners:
EM stocks were up:
EM junk firmed:
Treasuries were bid big:
Bunds were flat:
Italy retraced:
And stocks rallied:
Remarkable the impact of the US dollar isn’t it? If you know where it is going then you know where everything else is going as well. That’s not so easy when a loud-mouthed President won’t leave the Fed alone:
If Trump wanted a “cheap money Fed” he already had one in Janet Yellen. Even so, Trump can only jawbone reality so much. The US economy remains strong:
Though not as strong as some hoped:
And the DXY long is certainly getting substantial:
Adding to Fed jitters is Jackson Hole, via MarketWatch:
Investors are awaiting the Jackson Hole gathering where central bankers from around the world may debate different policy approaches to normalize interest rates and their postcrisis balance sheets, bloated after years of quantitative easing. Some analysts are hoping for further details on when the Federal Reserve will stop shrinking its more than $4.2 trillion portfolio of securities, which at its peak stood at around $4.5 trillion.
Central bankers have, in the past, used Jackson Hole to deliver important policy signals. Fed Chairman Jerome Powell will deliver a speech on “monetary policy in a changing economy” on Friday at 10 a.m. Eastern. Investors will also receive an update of the Fed’s thinking through the minutes of the August meeting for the Federal Open Market Committee, its rate-setting body, on Wednesday.
“This time, with the U.S. economy performing well and the U.S. equity market in reasonably good shape, it’s hard to believe that the Fed Chairman will do anything other than maintain the current path of policy normalization,” said Kit Juckes, chief fixed income and FX strategist at Société Générale, in a Monday note.
I agree. Indeed, I still think Trump will move to more stimulus before the Fed can take its foot off the brake.
