This week it’s all about the US as we draw closer to Jackson Hole on Friday. The Dollar Index reached a near five-month low with many traders betting on Jerome Powell to signal the
start of policy easing.
Yesterday was the US Democratic Convention, where President Biden delivered an emotional speech for Democrats to support Kamala Harris. This is a stark contrast to a couple of months ago, where Biden was holding onto his tenuous position as Democrat nominee. After a poor debate and increasing pressures from his party, Biden stepped down and Harris clinched the nomination in 16 days, the fastest nomination in more than three decades.
The convention was a “passing of the torch” moment where renewed vigor from Harris will cause issues for Trump in the US election on 5 November.
This morning Riksbank followed the general consensus and cut rates by 25 basis points, from 3.75% to 3.5%. This is the second time since May they’ve lowered borrowing costs. This is an aim to provide more easing due to inflation falling below its target and the economy struggling along. Based on a Riksbank statement, the policy rate may be cut two or three more times this year if inflation outlook remains the same.
The UK will continue waiting for PMI data on Thursday and Jackson Hole on Friday, with a focus on BoE Governor Andrew Bailey’s speech at the symposium.
