Published: Wed, August 23, 2017
Finance | By Kristine Clayton

Global Economy Week Ahead: Europe PMI, US Durable Goods, Jackson Hole

Global Economy Week Ahead: Europe PMI, US Durable Goods, Jackson Hole

The dollar bounced on Tuesday after starting the week lower ahead of the Jackson Hole symposiums to take place later this week, which will feature the key G3 central banker trio of Yellen, Draghi, & Kuroda.

US stock index futures were higher on Tuesday as investors picked up beaten-down stocks, while focus also shifts to speeches from central bankers later this week.

The ECB's intention to start winding up its 60 billion-euro a month stimulus programme for the euro zone economy has revived bad memories of when the Federal Reserve tried to signal something similar in 2013.

"Inflation has been the big question mark, both here and overseas", said Michelle Meyer, head of USA economics at Bank of America NY. Investors are awaiting speeches from both Fed chair Janet Yellen and Mario Draghi. The market looks short-gamma outside Friday's ranges and may end up in chasing price action, said the traders, who asked not to be identified as they weren't authorised to speak publicly. So they are much more susceptible to movements in US government bond yields than those on the euro zone benchmark, German Bunds. Still, the index is up 13.5 percent since the election. The U.S. dollar has underperformed so far this year on doubts about President Donald Trump's ability to fulfil his economic agenda amid turmoil in the White House, and on the Fed's go-slow approach on tightening due to tepid inflation. Against the euro, the dollar is valued at $1.1756 compared to yesterday's $1.1815.

"We have certainly noticed the stock market is up considerably over the past year", she said.

UBS research suggests more than 60 percent of EM carry trades - borrowings in cheap developed economy currencies invested in higher-yielding emerging currencies - are denominated in dollars, Narain said.

Selling pressure remained relatively subdued, however, with a lack of major USA economic data keeping some traders on the sidelines.

New Home Sales in July are forecast to show a 610k rise the same as they did in June, and a 0.8% rise month-on-month.

The euro (EUR) is hovering around opening levels against the United States dollar (USD) quoted at 1.18006 on Tuesday 22nd August.

Meanwhile despite optimism over Yellen's upcoming speech at the Jackson Hole summit, the US Dollar's advance remains tempered by political concerns.

Persimmon shares rose 45p to 2,601p as the housebuilder reported a 30% rise in half year, pre-tax profits thanks to high employment levels which supported the market and mitigated the impact of Brexit-fuelled inflation.

Dispensing equipment maker Nordson (NDSN) is also likely to come under pressure after reporting better than expected third quarter results but providing disappointing guidance.

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