Week ahead: Jackson Hole looms over trading floors

Markets face potential volatility this week as investors look to Fed Chair Powell’s Jackson Hole speech for policy clues. Nvidia’s earnings on 27 August will influence tech sentiment, particularly regarding AI demand amid geopolitical tensions. Defence stocks remain sensitive to developments in Ukraine, while Japan’s political uncertainty – PM Ishiba resisting resignation after election losses – adds pressure to bond markets, pushing yields higher.

KEY INDICATORS

Forex moves

Dollar strengthens as US manufacturing data lifts the DXY to 98.65 and Powell’s hawkish tone cuts chances of a September rate cut to around 25%.

Pound falls to a 10-week low near $1.3316 after the US–EU trade pact announcement.

Powell’s Jackson Hole speech remains in focus for signals on US interest rate policy.

The US–EU trade pact introduces a 15% tariff on European exports while including $600 billion in investment pledges.

Commodities and equities

Oil climbs 1.29% to $63.52 per barrel on supply concerns linked to geopolitical tensions.

Gold slips $9 to $3,338 per ounce as higher US Treasury yields and a stronger dollar reduce safe-haven demand.

US equities fall, with the S&P 500 down 0.40% to 6,370, while European indices show mixed results amid policy and earnings uncertainty.

Asian markets

China’s Shanghai Composite reaches a 10-year high of 3,728.03, supported by policy expectations and easing trade frictions.

Japan’s PM Ishiba faces mounting calls to resign after election losses, adding pressure to bond markets and driving yields towards multi-year highs.

Political uncertainty around Ishiba’s leadership continues to weigh on market sentiment, particularly in fixed income.

Persistent US–India trade tensions, despite recent fiscal reforms, risk capping rupee gains and dampening investor confidence.

MARKET MOVERS

EUR/USD

• Technical breakout: Medium-term bias remains bearish. Price action is forming a potential top, suggesting a temporary upward retracement. Bespoke resistance is identified at 1.1645.
• Target projection (bullish): Expect a retracement move to test resistance at 1.1645.
• Target projection (bearish): Target 1: 1.1565; Target 2: 1.155.
• Opening expectation: Price likely opens slightly higher, offering opportunities to sell into rallies.
• Primary support zone: 1.1565–1.155.
• Strategy (bearish approach – primary outlook): Enter on rejection from resistance, aiming for 1.1565–1.155.
• Strategy (bullish approach – countertrend): Short-term rallies toward 1.1645 may allow for selling opportunities.
• Range trade: Monitor minor swings between 1.1600 and 1.1645 for intraday scalps.
• Key catalysts next week: Fed Chair Powell’s Jackson Hole speech (US rate guidance), US GDP revision, inflation numbers, Eurozone sentiment reports, Ukraine security talks, and global trade developments.
• Market context: EUR/USD remains under pressure, with short-term retracements possible. Traders should monitor resistance at 1.1645 and key support at 1.1565–1.155, as upcoming macro and geopolitical events may trigger volatility.

GBP/JPY

• Technical breakout: Primary trend remains bullish despite the recent pullback. Daily chart shows exhaustion in the sell-off, suggesting limited downside. Bespoke support is identified at 198.25.
• Target projection (bullish): Target 1: 200.25 – Target 2: 200.5. Retracements toward resistance may offer tactical buying opportunities.
• Target projection (bearish): Setbacks likely limited to yesterday’s low at 198.25, with broader downside risk minimal given the bullish trend.
• Opening expectation: Price expected to dip slightly, providing opportunities to buy on retracements toward support levels.
• Primary support zone: 198.25–197.75 (short-term pivot and intraday channel base).
• Secondary support zone: 197.50–197.75 (minor corrective area for tactical entries).
• Strategy (bullish approach): Buy on dips toward support levels with targets at 200.25–200.5.
• Strategy (bearish approach – countertrend): Minor pullbacks may offer short-term scalps, but the overall trend remains bullish.
• Range trade: Monitor intraday swings around 198.5–200 for tactical entries.
• Stop-loss levels: Below 197.70 for bullish positions; above 200.60 for countertrend short setups.
• Key catalysts next week: UK economic data (PMI, retail sales), JPY reactions to Japanese inflation and BoJ commentary, and global risk sentiment including US macro data and geopolitical developments.
• Market context: GBP/JPY remains in a bullish medium-term trend, but short-term retracements are likely. Traders should manage risk carefully as upcoming macro and geopolitical events may trigger volatility and intraday reversals.

XAU/USD

• Technical breakout: Recent price action shows mixed daily results over the past three days. Selling pressure observed during the Asian session suggests cautious sentiment. Bespoke resistance is identified at 3354.
• Target projection (bullish): Price may test resistance at 3354, offering tactical buying opportunities on retracements.
• Target projection (bearish): Setbacks likely limited to yesterday’s low at 3300–3293, with broader downside risk minimal given the overall trend.
• Opening expectation: Trading is expected to remain mixed and volatile, with short-term swings providing tactical opportunities.
• Primary support zone: 3300–3293 (short-term pivot and intraday channel base).
• Secondary support zone: 3295–3293 (minor corrective area for tactical entries).
• Strategy (bullish approach): Buy on dips toward support levels, targeting 3354.
• Strategy (bearish approach – countertrend): Minor pullbacks or rallies toward resistance at 3354 may offer short-term selling opportunities, but the broader trend remains bullish.
• Range trade: Monitor intraday swings between 3325 and 3354 for tactical entries.
• Stop-loss levels: Below 3290 for bullish positions; above 3356 for countertrend short setups.
• Key catalysts this week: US economic data (GDP revision, inflation), Powell’s Jackson Hole speech, and geopolitical tensions (Ukraine, Middle East) influencing gold volatility.
• Market context: Gold remains under mixed pressure, with short-term swings expected. Traders should monitor resistance at 3354 and support at 3300–3293, as upcoming macro and geopolitical events may trigger volatility and intraday reversals.

NEWS HEADLINES

Global policy and market sentiment

Powell’s Jackson Hole speech is under scrutiny as Trump pressures for rate cuts and threatens Powell’s removal, raising risks to Fed independence.

Concerns over US fiscal dominance are pushing investors towards emerging markets with stronger fundamentals and valuations.

At an 18 August White House summit, European leaders and Zelenskyy discussed new security guarantees for Ukraine, heightening defence-sector focus.

The US–EU trade pact sets 15% tariffs on EU exports to the US and includes energy and investment pledges, boosting corporate sentiment.

US inflows into UK equities are reaching record levels, supported by stability and attractive valuations, though weak employment and high borrowing costs temper optimism.

Foreign exchange movements

The US dollar strengthened ahead of Powell’s Jackson Hole speech, with the DXY at 98.65.

EUR/USD fell to 1.1605 despite German manufacturing edging up to 49.9.

GBP/USD slipped to 1.3411.

USD/JPY jumped to 148.34, while USD/CHF reached 0.8085.

AUD/USD eased to 0.6419, and USD/CAD rose to 1.3907 after stronger Canadian PPI (+2.6% YoY vs 1.9% expected).

USD/JPY ticked up further to 148.53 after Japan’s inflation eased to 3.1% (vs 3.3% expected).

EUR/USD remained steady at 1.1610; GBP/USD at 1.3415.

Commodities and stock markets

Meta fell 1.15% (fourth straight loss) and Walmart sank 4.49% on weak earnings.

First Solar dropped 6.99% and SolarEdge 5.77% after Trump’s criticism.

Coty plunged 21.6% following a surprise loss and weak sales outlook.

US 10-year yield rebounded to 4.328% as jobless claims rose to 235k (vs 225k expected) and July home sales grew 2% (vs -0.2% expected).

FTSE 100 rose 0.23% to a new record, DAX gained 0.07%, and CAC slipped 0.44%.

WTI crude gained 1.29% to $63.52 per barrel on geopolitical tensions.

Gold fell $9 to $3,338/oz ahead of Powell’s Jackson Hole speech and key economic events.

Canada retail sales are expected to contract by -0.4% MoM in July.

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