Stocks Steady but Dollar Pops as Leaders Meet – USD up 0.3%
All three of the major US stock indices finished close to flat in trading on Wall Street yesterday as investors analyzed the meeting of international leaders in Washington and looked ahead to key Fed updates later this week. The Dow closed down 0.08% at 44,911, the S&P down 0.01% at 6,449, and the Nasdaq added just 0.03% to finish at 21,629. Currency markets saw more movement, with the dollar pushing higher against the majors, the DXY up 0.30% to 98.15. Treasury yields also pushed higher, the 2-year up 1.2 basis points to 3.763% and the 10-year up 1.8 basis points to 4.334%. Oil also gained ground as traders priced in a lengthier process toward a ceasefire, Brent up 1.06% to $66.35 and WTI up 0.88% to $63.35. Gold remained in recent ranges, closing down 0.10% on the day at $3,332.72 an ounce.
Focus to Move from Politics to Central Banks
Investor focus is expected to swiftly move from politics and updates on the future situation in Ukraine to central banks and rate moves in the next few sessions. Initial meetings between concerned parties with regard to Ukraine have now taken place, and most traders feel that a resolution is some distance away. They will now turn their attention to central bank updates scheduled later in the week. We are due for a rate update from the RBNZ tomorrow and the FOMC’s meeting minutes at the end of the day, but without doubt the main focus for investors will be the Fed’s Jackson Hole Symposium at the end of the week. We may have some nice entrées from other central banks at the event, but the main dish that we are waiting for is the keynote speech from Jerome Powell. This could potentially set the tone for the next 6–9 months, and if he remains more hawkish than the market is at the moment, we could see some strong moves into the weekend.
Trading Calendar Starts to Pick Up Today
The macroeconomic calendar does start to pick up today for traders after a quiet start to what could be a busy week. The Asian session will see an initial focus on antipodean markets with New Zealand PPI data (exp. 1.4% q/q) out early in the session, followed by an Australian consumer sentiment number later in the morning. There is little scheduled later in the day, and it is a similar story for the European session, where traders are expected to continue focusing on any Ukraine updates. However, we do have the first Tier 1 data releases of the week scheduled once New York opens. Canadian CPI numbers are due out early in the session, with the monthly number expected to show a 0.3% increase and the median year-on-year a 3.1% increase. These numbers will be closely watched by both the market and the Bank of Canada, and any big misses will see moves in the loonie. We are also set to hear from the Fed’s Michelle Bowman later in the day when she speaks from Jackson Hole.
