Aussie turns from highs ahead of Jackson Hole

Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist

USD rebounds from lows

The US dollar rebounded from six-month lows overnight as markets turned cautious ahead of tonight’s all-important speech from Federal Reserve chair Jerome Powell at the Jackson Hole Symposium.

The Jackson Hole Symposium is one of the highlights of the central banking calendar. Key policymakers from around the world meet to pontificate about the state of the global economy and the event has previously seen major announcements of policy shifts. 

Ahead of Powell’s speech, the USD rebounded from recent lows.

The US dollar strength saw the AUD/USD turn from levels near the year’s highs with the pair down 0.6%.

The NZD/USD reversed from two-month high to lose 0.3%.

The USD/CNH rebounded for a second day while the USD/SGD turned sharply from 18-month lows.

Powell speaks at 12.00am AEST.

UK consumer confidence vs market volatility

UK consumer confidence has been rising even while corporate confidence appears to be shaky throughout Europe. In the euro area, confidence is at its greatest level since early 2022, while in the UK it is at its best level since mid-2021.

In August, we anticipate the rise to continue and aim for a one-point increase to -12.

Although the survey was conducted in the first two weeks of the month, there are two opposing issues: lower interest rates as a result of weakening inflation momentum rather than weak growth, along with the Bank of England’s rate cut on August 1st, may boost confidence while equities market volatility may have the opposite effect.

GBP/USD has broken 50-day moving average of 1.27620 and looks set to breach 100-day moving average of 1.3227, and is in a short-term bullish trend.

USD/SGD climbs from 18-month lows

Singapore core inflation is forecast to rise from 2.9% y-o-y in June to 3.0% y-o-y in July when released at 1.00pm SGT (3.00pm AEST).

As a result of the general increase in all components, including a resurgence in food prices, in accordance with the increase in import costs in recent months, core inflation is implied to have stepped up to 0.3% m-o-m from 0.0% in the previous month.

With growing private road transport inflation on the back of rising automobile costs and a minor increase in certificate of entitlement (COE) charges, we anticipate headline inflation to rise to 2.7% y-o-y from 2.4%.

In accordance with market expectations, MAS maintained the S$NEER slope, band, and mid point in its July Policy Meeting Statement.

MAS’s assessment of inflation does have some dovish aspects, though: 1) a slight lowering of the headline inflation projection, and 2) an admission of slower QoQ core inflation.

The USD/SGD jumped from 18-month lows overnight in a sign the recent weakness in this pair might be due for a pause.

USD rebounds from six-month lows  

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 19 – 24 August

All times AEST

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

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