S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Danske Research Team notes that Federal Reserve (Fed) Chair Kevin Warsh’s hawkish Jackson Hole speech pushed EUR/USD lower, with markets now pricing September as nearly a coin-flip for a rate hike. The team highlights that the Dollar strengthened versus both the Euro and Japanese Yen, while EUR/USD is broadly unchanged in early Asian trading despite the repricing in US rates.
Hawkish Fed rhetoric pressures Euro
“In the US, Fed Chairman Warsh struck a notably hawkish tone in his speech at Jackson Hole, reaffirming that the 2% PCE target is “firm” and “fixed” and signalling that more work remains if inflation does not move towards target with sufficient speed.”
“This represents a step away from his July press conference tone, where Warsh had emphasised markets’ role in determining the direction of rates. The remarks sent EUR/USD lower. Overall, Warsh’s message was consistent with a central banker open to hiking at the next meeting, with September now priced as nearly a coin-flip.”
“Also on the wires, Fed’s Hammack, who voted for a rate hike at the last meeting, struck a hawkish tone, calling for immediate action on rate hikes and warning that waiting risks creating further pain. She expects inflation to end the year around 3%, well above the 2% target, and does not view current financial conditions as restrictive.”
“Focus turns to the German flash inflation figures for August, ahead of the euro area release tomorrow. Headline HICP inflation is expected to increase to 3.1% y/y (prior: 2.8%), driven by energy prices. Attention will centre on momentum in underlying inflation, which remained unaffected by the energy shock in the figures from Spain and France last week.”
“This week we have another crucial event for the US market with the labour market report for August, which is released on Friday. On top of this we have inflation data from the eurozone.”
