Key Data Releases 24th August 2020
- Durable Goods Orders MoM (consensus 4.3%, previous 7.3%)
Previously, durable goods rose 7.3 % in June MoM, following a downwards 15.1% in May, beating the market forecasts at 7%. Most noticeably, orders for non-defence capital goods excluding aircraft’s, rose 3.3%, following +1.6% in May. This is typically used as a proxy for business spending plans, therefore an uptick here could indicate a recovering US economy.
- Jackson Hole Meeting
U.S. Federal Reserve Chairman Jerome Powell’s is expected to address long term recovery plans for the US economy on Thursday. Investors will be looking for signs of how aggressively it will seek to handle the long-term recovery from the pandemic as well as any hints on YCC, which previously let down the market last week. Both Gold and the DXY Index will be prone to any aggressive or laid back tones set by Powell. Though it is expected that the central bank will reiterate its pledge for ultra-low rates for a longer period of time, which would support gold prices and see the dollar under pressure with a potential leg lower.
This is said to the main market driver this week, traders should listen closely for any further additional stimulus measures, the extended period of low rates, yield curve control measures and how the FED intends to support the economy in the face of increasing outbreaks. It will also be interesting to see if there are any mentions around the oxford vaccine which has been the main cause of equity rallies today.
“(It) may be expected to signal greater tolerance for above-target inflation, keeping real interest rates low.”
Lower U.S. interest rates cut the opportunity cost of holding non-yielding bullion – IG Trading
- GDP Growth Rate QoQ 2nd Est Q2 (consensus -32.5%, previous -5%)
It is widely expected the 2nd Est Q2 figures are likely to come in significantly negative, and although economic activity has picked up in May through to June, this is now up in the air following a surge in covid-19 infections. Though largely expected negative, the dollar could be prone for further weakness.
- GDP Growth Rate Annualised Q2 (consensus -39.6%, previous 8.2%)
Markets are most likely to focus on the speech from Carolyn A. Wilkins, Senior Deputy Governor of the Bank of Canada, due on Wednesday, followed by Macklem’s address on Thursday to grasp
a better understanding of the Canadian Economy, as well as the BOC, plans to support the economy. An uptick in recent data in addition to fairly stable oil prices (which have been trading in a tight range) is unlikely to see the BOC announce any real action in terms of stimulus, though the forward-looking view is important to take into account and this will generate some volatility for the CAD.