AUD/USD breaks out
The US dollar selling resumed and the AUD/USD having outperformed yesterday on the back of stronger Aussie data, has broken out above 0.6635-45 resistance just now. Can it hold its gains into the close? The breakout certainly suggests more gains could be on the way in the early parts of next week. Apart from PMI data, there is not much Aussie data to look forward to next week. So, the focus will be on the People’s Bank of China on Tuesday, followed by global PMIs on Wednesday and then the Jackson Hole Symposium at the end of the week. Can the AUD/USD extend its rise towards the July high near 0.6800?
PBOC interest rate decision
Chinese investors are looking at a relatively calm week following the release of important data in the preceding weeks. Overall, we saw mixed-to-weak data pointers, underscoring the need to lower interest rates. The People’s Bank of China last month cut interest rates in a surprise move. The 1-y Loan Prime Rate, which commercial banks use to lend to households and businesses, was trimmed to 3.35% from 3.45%, while 5-y Loan Prime Rate, which is an interest rate applied by commercial banks for mortgage loans, was trimmed to 3.85% from 3.95%. This time, no changes are expected, as the Medium-term Lending Facility (MLF) and 7-day reverse repo rates have remained steady throughout August.
Jackson Hole Symposium
The Economic Policy Symposium in Jackson Hole, Wyoming, draws central bankers, finance ministers, and financial market participants from across the globe. The Fed has historically used this convention to signal major policy changes. Are we going to see the biggest hint yet that the FOMC will embark on a rate cutting cycle starting at their 18 September meeting? Recent data showing stronger retail sales and jobless claims indicate that a 25-basis point cut at the September FOMC meeting seems more probable than a 50-basis point reduction that was priced in a couple of weeks ago. However, given the Fed’s increasing emphasis on the labour market, the upcoming non-farm jobs report on September 6 will be crucial in determining the final decision.
By Fawad Razaqzada, market analyst at FOREX.com
PBOC interest rate decision
Chinese investors are looking at a relatively calm week following the release of important data in the preceding weeks. Overall, we saw mixed-to-weak data pointers, underscoring the need to lower interest rates. The People’s Bank of China last month cut interest rates in a surprise move. The 1-y Loan Prime Rate, which commercial banks use to lend to households and businesses, was trimmed to 3.35% from 3.45%, while 5-y Loan Prime Rate, which is an interest rate applied by commercial banks for mortgage loans, was trimmed to 3.85% from 3.95%. This time, no changes are expected, as the Medium-term Lending Facility (MLF) and 7-day reverse repo rates have remained steady throughout August.
Jackson Hole Symposium
The Economic Policy Symposium in Jackson Hole, Wyoming, draws central bankers, finance ministers, and financial market participants from across the globe. The Fed has historically used this convention to signal major policy changes. Are we going to see the biggest hint yet that the FOMC will embark on a rate cutting cycle starting at their 18 September meeting? Recent data showing stronger retail sales and jobless claims indicate that a 25-basis point cut at the September FOMC meeting seems more probable than a 50-basis point reduction that was priced in a couple of weeks ago. However, given the Fed’s increasing emphasis on the labour market, the upcoming non-farm jobs report on September 6 will be crucial in determining the final decision.
By Fawad Razaqzada, market analyst at FOREX.com
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