2022-08-29 16:18:49
FOREX WEEKLY MARKET UPDATE
US Dollar Rises
The US dollar retained much of its Friday Jackson Hole bounce against its major trading partners. The after-effects of Fed Chairman Jerome Powell's Aug. 26 Jackson Hole speech may keep the markets on edge before those key data are released as markets look for various Fed speakers this week to soften Powell's hawkish message that Fed will remain in inflation-fighting mode for a time even if economic conditions deteriorate.
ECB needs another big rate hike in September
A euro zone recession is now very likely but that alone will not bring down inflation and the European Central Bank should opt for a big rate hike next month, ECB policymaker Martins Kazaks said on Saturday.
The ECB raised rates by 50 basis points in July to zero and a similar move is being priced in for Sept 8 but some policymakers have started talking about an even bigger increase as the inflation outlook is deteriorating.
Gold drops
Gold prices fell to a one-month low as U.S. Federal Reserve Chair Jerome Powell's stance to continue with aggressive monetary policy to bring down inflation dented the zero-yielding metal's appeal and boosted the dollar.
Could Fed's 'softening' labor market prediction mean 4 million lost jobs?
In 2019, the U.S. unemployment rate averaged 3.7% and consumer prices rose at an annual rate of around 1.8%.
Fast forward to 2022, and while the unemployment rate has averaged the same 3.7% for the first seven months of the year, prices are sky-rocketing at an annual rate of more than 8% - touching off a potentially intense debate at the Federal Reserve over whether the "hot" labor market policies embraced before the COVID-19 pandemic can survive in the economy that is emerging.
U.S. central bank officials acknowledge their battle to tame raging inflation is likely to cost jobs as rising interest rates slow the economy and companies retool staffing plans in response, though whether the loss of employment will be modest or massive is unknown.
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