USD in consolidation mode ahead of Jackson Hole - BNZ

Kymberly Martin, Senior Market Strategist at BNZ, suggests that the USD appears to be in consolidation mode ahead of the key risk event for the week, Fed Chair Yellen’s scheduled speech at Jackson Hole.

Key Quotes

“The market has recently nudged up expectations for near-term Fed activity but still remains fairly reticent to fully price a rate hike. It prices only 15bps of hikes by year-end. A full 25bps hike is not priced until mid-next year.

Both the USD index and the EUR/USD traded a bit of a range overnight. However, the GBP/USD extended its gain for the week. It pushed higher in the afternoon and evening before consolidating overnight. It now trades around 1.3200. We continue to see the GBP/USD trading lower over the medium-term. However, positioning is the key near-term risk. Given speculative short positions in the GBP are at record highs, it remains susceptible to short-term bounces on new information that does not support an entrenched negative view.”