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CIBC
This week, attention will turn to the gathering of central bank chiefs in Jackson Hole for clues about how the US Federal Reserve plans to bring its vast QE bond-buying programme to an eventual halt after more than a year of emergency stimulus. Investors will watch the meetings closely to gauge the future of global monetary policy, knowing that if the American central bank changes course, the world economy tends to follow.
We’ll be looking for more news on the timing on Aug. 27, when Fed Chairman Jerome Powell speaks at the Kansas City Fed’s Jackson Hole conference, now set to be held online. But like it or not, tapering is coming. And when it does, we’ll see how much of it is already priced in.
US Treasury Secretary Janet Yellen has told senior White House advisers that she supports reappointing Jerome Powell as Federal Reserve chair, a move that greatly increases his chance for a second term. President Joe Biden hasn’t made a decision yet and is likely to make his choice around Labor Day.
Citi
USD broadly lower in the G10 and EM space while Asian Equities staged a cautious rebound with TWSE (+2.57%) and HSI (+1.81%) outperforming in the asian session. AUD (+0.40%) led gains in the G10 segment as PM Morrison urged nations to focus on reopening efforts once 70 – 80% vaccination rate has been reached. New Zealand, on the other contrary, announced an extension of lockdowns which sent NZD paring gains slightly from +0.29% to 0.15% on the day.
In Asia FX, KRW outperforms the rest on the back of rebounding KOSPI index and stronger than expected trade data. However, our economics team noted YoY growth could start to moderate from Sep as low base effect wears off.
Elsewhere, all eyes are on Jackson Hole due this Friday where our economists expects Powell to live open all upcoming meetings for announcing tapering with our base case remains for a Sept announcement and an official start in December.
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