US Dollar extends losses to seven-month low as all eyes turn to Jackson Hole Primary tabs

LONDON (August 19) The US Dollar (USD) trades substantially softer this Monday, touching its lowest level since mid-January, mainly driven by a more than 1% appreciation of the Japanese Yen (JPY)  against the Greenback. . The Commodity Futures Trading Commission (CFTC) reported on Friday that hedge funds are net long on the Japanese Yen, and Asian and European investors seem to follow through on Monday. . As the Japanese Yen accounts for 13.6% of the US Dollar Index (DXY), the rise weighs on the index’s performance this Monday, pushing it to lows not seen in roughly seven months. 

On the economic data front, a rather soft start for the data this week where all eyes will be on Wyoming at the end of the week for the annual US Federal Reserve’s Jackson Hole Symposium. The event will have the crème-de-la-crème of central bankers speaking, including Fed Chairman Jerome Powell, and is known for being the occasion for the Fed to signal a change in monetary policy outside of its scheduled meetings. In the run-up to that event, several headlines will come out from other central bankers, and the US Purchasing Managers Index (PMI) data on Thursday will give the latest insights about the state of the economy.  

Daily digest market movers: Fast forward? 

• The Commodity Futures Trading Commission (CFTC) issued on Friday its weekly holding of speculative and non-speculative positions in currency futures markets. The report revealed that hedge funds are net long JPY for the first time since 2021.
• This week kicks off with comments from Federal Reserve Governor Christopher Waller, who delivers welcoming remarks at the 2024 Summer Workshop on Money, Banking, Payments, and Finance in Washington, D.C at 13:15 GMT.
• The US Treasury is allocating a short-term 3-month and 6-month bill at 15:30 GMT. 
• Asian equity markets are mixed, with Chinese indices up nearly 1%, while Japanese equities are sliding over 1% lower. European equities are also looking for direction while US futures are trading flat. 
• The CME Fedwatch Tool shows a 72% chance of a 25 basis points (bps) interest rate cut by the Fed in September against a 28% chance for a 50 bps cut.  Another 25 bps cut (if September is a 25 bps cut) is expected in November by 53.7%, while there is a 39.2% chance that rates will be 75 bps below the current levels and a 7.1% probability of rates being 100 basis points lower. 
• The US 10-year benchmark rate trades at 3.87% and is looking for direction after last week’s dip. 

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