Keeping Your Options Open: A Jackson Hole Story.

Top of the morning folks as we get on the week's session here in APAC.

Macro News Update:

• Week-On-Week, the DJIA shaves off 2% while the S&P & Nasdaq fell even further down than 2% marking the US 3 largest indexes’ 3rd consecutive week of losses as higher for longer rates fears sustained following Fed minutes release noting ‘significant risks to inflation’.?
• China urges banks to increase lending to revive its stricken economy as growth stalls & property sector ills far from recovering following most recent Chapter 11 filing from Evergrande’s Mainland unit.?
• Goldman Sachs is not expecting a strong signal from Powell this week at the Jackson Hole Symposium despite penciling in rate cut as early as Q2 next year. Morgan Stanley & JPMorgan doubles down on US bond bets despite proven wrong prior. (US 10-year Futures trades at 109190, day’s low at time of writing).

Energy:

• After a seven-week bullish streak, crude prices closed the week 2% lower as US rate fears & China’s economic woes outweigh tightening of supplies from Saudi & Russia. (WTI Futures trades at $80.59, slightly below day’s VWAP at time of writing).
• China Petroleum Engineering & Construction (CPECC) secured a contract from Adnoc Onshore (subsidiary of Abu Dhabi National Oil Company – ADNOC) to enhance production from its mature fields – Bab & Bu Hasa fields. This might spark demand picture out of China – which has been sorely missing.?

Jackson Hole:

• The usual cacophony of Central Bankers and Heads of Banks at this year’s Jackson Hole with one key caveat – the US rate picture as members of the US Fed spoke with dovish tones however and cracks appearing between voting members. However, the market continues to price in a hawkish Fed with the Dollar Index Futures trading above its 103.00 handle.?

FX Analysis:?

The Euro hanging by a thread currently trading near prior mid week inflection around the 1.08750 price line. Subdued trade on the DXY helping matter early this session. In terms of further support, there’s nothing here until we get to late June 2023 base camp at 1.08435.

USDJPY continues to trade heavily above its longer-term RTL. The A-grade trade here IMO would be a retest of that RTL around the 143.900 handle given current macro drivers remain unchanged and the DXY Futures remain above inflection point at 102.800.?

The Aussie Dollar continues to be dampened by pessimistic data & the US Dollar. Currently nestling on a much longer STL going back March of 2020. A break and day’s close below here?might spell further pain for Aussie bulls.?

Economic Calendar:

• The Economics Calendar is quiet this week as we head towards month-end.
• Apart from Jackson Hole, we do have the regular scheduled weekly oil data on Wednesday from the US Department of Energy followed by Durable Goods Orders on Thursday with headline MoM figures expected to come in at -4% from prior 4.7% along with Initial Jobless Claims, expected 240K versus prior 239K.
• The folks at Trading Economics, however, is forecasting a positive figure albeit mildly at 0.5% for DGO data & 242K for IJC.
• On Friday, we await word from the big man himself – Fed Chair Powell where he is expected to not deliver a strong message but rather tow the line by ‘keeping all options open with respect to data’.

‘keeping all options open with respect to data’.

That is it from me today. If you fancy trading in some of these markets, do check us out at Vantage. Use the link below to register your interest & open a LIVE or Demo Account with us. Available via our Mobile App, MT4, MT5, Protrader powered by Tradingview.

Sources: Bloomberg, Mark Gardner (CEO & Head of Equities Advisory at MPC Markets), Trading Economics, Vantage Markets.?

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