Pay attention to Jackson Hole

Financial markets this week were overshadowed by distressing news from China, particularly the Chapter 15 bankruptcy filing by Evergrande Group, placing considerable downward pressure on the yuan and Chinese equities. Amidst this, the US dollar surged, buoyed by investors seeking safety. In other news, the FOMC meeting minutes indicated growing dissent within the Fed, with some officials preferring to leave policy rates unchanged. Outside of the US, central banks in New Zealand and Norway went along with market expectations, with the former on hold and the latter still hiking. In currency markets, the British pound emerged as a contender to the dollar thanks to strong wage data. As we look ahead, concerns around China will likely persist, although we think the dollar rally is running out of steam. Flash PMI data from a number of economies will provide an update on global growth conditions, with Europe teetering on the brink of recession, but resilience expected out of the US and UK. The main event of the week, however, will be the Jackson Hole Economic Policy Symposium, with both Fed Chair Powell and ECB President Lagarde scheduled to speak on Friday.

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Authors: 

Simon Harvey, Head of FX Analysis

Jay Zhao-Murray, FX Market Analyst

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst

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