06/12/2024
Written by: Ian Morley
Summary:
Optimism surrounding the US economy persisted on Friday, pushing equity markets higher and recovering the losses incurred earlier in the month. As concerns eased, expectations of significant rate cuts by the Federal Reserve this year continued to diminish. This led to a decline in the USD, with the index hovering near its lowest levels of the year. GBPUSD has returned to trading at one-month highs, while EURUSD is now trading at levels last seen in January.
Outlook:
The main focus this week will be the Federal Reserve’s Jackson Hole symposium on Friday, where Fed Chair Powell is expected to speak. It is anticipated that Powell will signal a rate cut in September; however, it remains uncertain whether he will suggest a 0.50% cut, as markets had anticipated earlier in the month.
The economic calendar is relatively quiet this week, with the release of the Fed minutes on Wednesday evening. On Thursday, PMI figures from the UK, EU, and US are due, along with the ECB minutes and the latest wage data. With market sentiment still buoyant, we expect last week’s trends to persist, likely resulting in a weaker USD and a stronger GBP.