Forex Playbook WN34: PMI’s Rock the Markets Ahead of Jackson Hole
New format that condenses analysis to be easily digestible
INTENDED USE: Analysis of the Forex Markets that can be studied to aid with your trade planning.
DERBYSHIRE GB / AUGUST 23rd, 2023 - Updated following the PMI reports, all of which missed expectations. Next update tomorrow if US unemployment claims surprise otherwise after Jackson Hole on Friday.
Macroeconomic Snapshots
US DOLLAR: Macroeconomic factors are likely to provide upward support to the fundamental value of the dollar. However, there are downside risks from sentiment surrounding the end of the Feds hiking cycle and an improving situation regarding inflation. The intermarkets show that there has recently been a lack of confidence in the economic outlook as the S&P 500 took a slightly bearish fall last week below the 50 day moving averages while the six month treasury yields reflects hold expectation from the Fed at 5.52% vs the Fed Funds rate of 5.50%. Over the long term, the US Dollar Index (DXY) is expected to remain above the 100 area and possibly climb to test the 105 area so look for opportunities to buy and sell from these extremities.
EURO: Macroeconomic factors are likely to provide upward support to the fundamental value of the euro. However, there are downside risks from sentiment surrounding the end of the ECB's hiking cycle and risk aversion if the situation in Ukraine deteriorates. The intermarkets show that there has recently been a lack of confidence in the economic outlook as the DAX took a bearish fall last week below the 50 and 100 day moving averages while the six month bund yields reflects dovish expectations from the ECB at 3.55% vs the Main Refinancing rate of 4.25%. Over the long term, the EUR/USD is expected to remain above the 0.97 area with an eventual return to the 1.20 area so look for opportunities to buy into the existing downtrend.
POUND STERLING: Macroeconomic factors are likely to provide upward support to the fundamental value of the pound. However, there are downside risks from sentiment surrounding the end of the Bank of England’s hiking cycle, the cost of living crisis and risk aversion if the situation in Ukraine deteriorates. The intermarkets show that there has recently been a lack of confidence in the economic outlook as the FTSE 100 took a bearish fall last week below the 50, 100 and 200 day moving averages while the six month gilt yields reflects hawkish expectation from the Bank of England at 5.7% vs the Bank rate of 5.25%. Over the long term, the GBP/USD is expected to remain above the 1.20 area with an eventual return to the 1.31 area so look for opportunities to buy into retracements of the existing uptrend.
Last Week's Events
Tuesday, August 15th
US Retail Sales
Wednesday, August 16th
GB CPI
US FOMC Meeting Minutes
Thursday, August 17th
US Unemployment Claims
Friday, August 18th
GB Retail Sales
This Week's Events
Wednesday, August 23rd
EA PMI
GB PMI
US PMI
Thursday, August 24th
US Unemployment Claims
Day 1 of the Jackson Hole Symposium
Friday, August 25th
Day 2 of the Jackson Hole Symposium
Next Week's Events
Tuesday, August 29th
US CB Consumer Confidence
US JOLTS Job Openings
Wednesday, August 30th
EA GE Prelim CPI
US ADP Non-Farm Employment Change
US Prelim GDP
Thursday, August 31st
EA CPI Flash Estimate
US PCE Price Index
US Unemployment Claims
Friday, September 1st
US Average Hourly Earnings
US Non-Farm Employment Change
US Unemployment Rate
US ISM Manufacturing PMI
Gavin Pearson
Retail trader since 2008
Specialises in forex G7 currencies
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