The DAX index continues to have an uneventful week. Currently, the pair is trading at 12,378, up 0.10% on the day. On the release front, German Final GDP improved to 0.5% in the second quarter, matching the estimate. Investors will be monitoring the economic symposium at Jackson Hole as Federal Chair Jerome Powell addresses the meeting.
The ECB released the minutes of its July meeting on Thursday. Policymakers were in agreement that economic growth in the eurozone was as expected, and saw no need to tweak monetary p0licy. The minutes noted that the eurozone economy remained in expansion mode and unemployment was falling. However, the threat of protectionism and a global trade war marked serious concerns, which if not addressed, could dampen eurozone growth. Inflation has risen to 1.7%, which some, though it remains unclear if this meets the ECB target of “close to but below 2.0%”. With the ECB expected to wind up its asset-purchase program in December, investors will be looking for policymakers to confirm this move.
With a lack of data for the markets to digest the week, the Federal Reserve is in the spotlight. On Wednesday, the Fed released the minutes from its August meeting. The minutes noted that the U.S economy remains strong and hinted that the Fed would raise rates in September. However, policymakers expressed concern about escalating trade tensions, saying that a global trade war could hurt the U.S economy. On Friday, Fed Chair Powell will address the Jackson Hole symposium. With the heads of the ECB and Bank of Japan conspicuously absent, Powell’s speech will be the main event of the meeting. With a September rate hike practically a given, investors will be looking for Powell to discuss trade tensions, particularly with China, as well as the lack of wage growth despite a tight labor market. Earlier this week, Powell said that the Federal Reserve would maintain its independence and would not be influenced by President Trump’s criticism of the Fed’s plans to continue raising interest rates.
