Forexlive European FX news wrap 20 August – An uneventful session

• Will the Jackson Hole event be bearish for stocks?
• Bundesbank says wage growth has slowed down in Q2
• Eurozone July final CPI +2.6% vs +2.6% y/y prelim
• Dollar on troubled shores so far this week
• Eurozone June current account balance €51.0 billion vs €36.7 billion prior
• European equities open marginally higher to kick start the day
• What are the main events for today?
• Eurostoxx futures +0.1% in early European trading
• Germany July PPI +0.2% vs +0.2% m/m expected
• Switzerland July trade balance CHF 4.89 billion vs CHF 6.18 billion prior
• Gold breakout holds more tentative for now
• The Trump-Harris debate for 4 September will no longer take place
• Not too much on the agenda in European trading later today

Markets:

• NZD leads, EUR lags on the day
• European equities mostly flat;
  S&P 500 futures slightly higher
• US 10-year yields up 10 bps to
  3.875%
• Gold
  up 0.8% to $2,523.80
• WTI
  crude up 0.38% to $73.87
• Bitcoin
  up 1.8% to $60,562

It was
another slow session due to the lack of key economic releases. The sentiment in
the markets remains mostly positive as everyone’s looking forward to Fed Chair
Powell’s speech on Friday expecting a pre-commitment to a rate cut in
September.

In the FX
market, the major pairs are basically flat on the day with the USD remaining on
the backfoot amid the risk-on sentiment. Equities continue to benefit from the
prospects of rate cuts into resilient growth as that should boost economic
activity.

Gold has
been another notable mover in the past few days as it reached a new all-time
high. The Fed’s monetary policy trajectory is one of the main drivers of the
precious metal as it influences real yields.

The recent crude oil
weakness, on the other hand, has been a head-scratcher but I can see the
pricing out of the geopolitical risk premium as the main reason as lots of time has passed
and we haven’t got any Iran retaliation.

Bitcoin should
be another major beneficiary of the easing cycle into resilient growth as it’s
basically digital gold on steroids.

This article was written by Giuseppe Dellamotta at www.forexlive.com.