EUR/USD is almost unchanged in the Monday session. Currently, the pair is trading at 1.1618, down 0.02% on the day. On the release front, German Ifo Business Climate improved to 103.8, above the estimate of 101.9 points. There are no U.S events on the schedule. On Tuesday, the U.S releases CB Consumer Confidence.
Federal Reserve Chair Jerome Powell was the keynote speaker at Jackson Hole, but the dovish tone of his remarks pushed the U.S dollar lower on Friday. Powell reiterated that the Fed would continue its policy of gradual interest rate hikes, saying that a cautious approach was prudent. The Fed has faced criticism about its current policy from both sides. some analysts argue that the Fed has been too aggressive, given weak inflation, while others say the Fed should tighten more quickly, due to the extremely tight labor market. Powell appeared to take a middle approach of raising rates, but slowly. The Fed has already raised rates twice this year, and a September hike is practically a given, with the CME Group estimating the odds of a hike at 96%. The odds a December hike currently stand at 66%.
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.
