(27 AUGUST 2020)DAILY MARKET BRIEF 2:USD soft before Powell’s Jackson Hole speech
The US dollar index slipped below the 93 mark ahead of the Jackson Hole meeting, and the US 10-year yield steadied a touch below the 0.70% mark.
The greenback continues defining the trajectory of EURUSD and GBPUSD. Even though the actual levels are tempting for fresh short positions, a further weakness in the US dollar could unlock some more upside potential in both pairs. The medium-term outlook for both euro-dollar and sterling-dollar remains negative.
Gold attracted dip buyers near the $1900 per oz on Wednesday and recovered a touch above the $1950. The yellow metal is expected to trade sideways in the absence of a meaningful shift in the market sentiment. A less dovish perception of the US monetary policy could temper the inflation expectations and pull the price of an ounce lower along with risky assets. Likewise, a more dovish Fed would boost the inflation expectations and encourage a further rush to gold.
Elsewhere, the Australian private capital expenditure contracted less in the second quarter, the Japanese all-industry activity index rose a touch below the analyst expectations, and the Chinese industrial profits jumped 19.60% y-o-y in July, though the year-to-date profits fell 8.1% as a result of a heavy decline due to the pandemic-led slowdown earlier this year.
