Anticipation of upcoming macroeconomic events | 28 August 2024

EURUSD:

Fed Chairman Jerome Powell all but confirmed that the central bank will move into a rate-cutting cycle on September 18 during a speech at the Jackson Hole Economic Symposium last Friday, sending market appetite back under the ceiling.

There is little of note on the Eurozone economic calendar and Wednesday promises to be a quiet session on both sides of the Atlantic. At the start of the U.S. session, traders will be watching for a speech from Federal Reserve Board of Governors member Christopher Waller, while central bank watchers will be keeping an eye on any headlines from the EU Eurogroup meeting scheduled for the European market session.

Mixed U.S. home price data for June gave investors little to ponder. The monthly home price index from the Federal Housing Finance Agency fell -0.1% from May's 0.0% reading. Markets had expected the index to come in at 0.2%. The S&P/Case-Shiller home price index, meanwhile, rose 6.5% from a year earlier, less than the revised 6.9% but still more than the 6.0% expected.

Inflation data for August for the European Union's Harmonized Index of Consumer Prices will be released early Friday, and eurozone price growth is expected to fall to 2.8% y/y from the previous reading of 2.9% as inflationary pressures continue to ease, albeit not as quickly as European Central Bank (ECB) policymakers would like.

US Gross Domestic Product (GDP) data for Q2 will be released on Thursday and is expected to remain at 2.8% year-on-year. However, the key data this week will be Friday's Personal Consumption Expenditures (PCE) price index for July, which is expected to rise to 2.7% year-over-year from 2.6% and remain at 0.2% month-over-month. Market participants, who have not given up hope for a rate cut, will expect the inflation data to come in below expectations, while data above forecasts may trigger a new burst of optimism among risk-averse investors.

Trading recommendation: Watch the level of 1.1180, if the level is fixed above, we take Buy positions, if the level rebounds, we take Sell positions.

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