- Draghi steers clear of monetary policy decisions ahead of Jackson Hole;
- EUR pops higher on strong manufacturing data;
- EIA seen reporting eighth consecutive drawdown in oil inventories.
It’s been a slow start to trading on Wednesday, much in keeping with the rest of the week so far, as traders wait in anticipation of the Jackson Hole Symposium which takes place over the next few days.
The event will see both Federal Reserve Chair Janet Yellen and ECB President Mario Draghi speak on Friday, which will be of keen interest to traders. Both central banks are expected to be very active between now and year-end and Jackson Hole is the perfect platform to lay the foundation for upcoming policy moves. Whether they will or not remains to be seen.
If Draghi’s comments today are anything to go by we should not get our hopes up. Draghi steered well clear of upcoming monetary policy decisions and if reports last week are to be believed, he may well do so again on Friday. The ECB is clearly very concerned about the recent appreciation in the euro – despite an insistence that it does not concern itself with such matters – and recent “misinterpretations” by traders to Draghi’s comments will likely mean he steers clear once again.
The euro is trading a little higher this morning after some more strong survey data from the region. Manufacturing and services PMIs from the eurozone, Germany and France were all very strong and well above the level that separates growth from contraction, suggesting that the recovery is continuing to gain traction. Manufacturing was a particular strong point in all three cases, despite the fact that the currency moves this year represent a potential headwind for exporters.
Oil is coming under a little pressure this morning after API on Tuesday reports another drawdown in inventories last week. Should EIA confirm a decline of around 3.59 million today, it would fall in line with expectations and be the eighth consecutive weekly drop which suggests the output cut is taking its toll. The fact that oil rigs in the US have stabilised and last week actually fell slightly would also suggest the worst of the glut may be behind us.
Other US data being released throughout the session today includes manufacturing and services PMIs for August and new home sales data. We’ll also get consumer confidence data from the eurozone, which is expected to remain below 0 – indicating pessimism – but it has improved dramatically over the last year and looks on the cusp of moving into positive territory for the first time since 2001. We’ll also hear from Robert Kaplan today who is one of the policy makers that has become increasingly concerned about a lack of inflation and recently suggested he may be willing to wait before raising interest rates again.
