US Dollar on Unsteady Ground Ahead of Yellen's Speech Tomorrow
- A sign of the summer (vol) lull: the USDOLLAR Index is down only -0.1% since last Tuesday, before I left for vacation.
- USD-pairs look to US Durable Goods today, Fed Chair Yellen's speech tomorrow for catalysts.
- August is typically a bad month for risk and a good month for the US Dollar - see the August forex seasonality report.
After being gone for a week-plus, I've come back to charts to find that...little, if anything, has changed. Since market close on August 16, the USDOLLAR Index has declined by a net of -0.1% (at the time of writing today), perfectly highlighting the plight of summer trading: low volatility. Yet over the next two days, there are chances of isolated bouts of acute price action thanks to significant US data and speeches by Fed officials.
However, for US Dollar bulls, tomorrow's speech by Fed Chair Janet Yellen at the Jackson Hole Economic Policy Symposium may prove to be a disappointment. After all, the theme of the conference is "Designing Resilient Monetary Policy Frameworks for the Future," suggesting that the focus will be on the longer-run impacts of central bank action. In other words, market participants, starved for a catalyst to help crystalize rate hike expectations, might not get what they're looking for; inherently, discussions for future operational framework aren't short-term in nature.
--- Written by Christopher Vecchio, Currency Strategist
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