Financial Breakfast on August 27: The US dollar rises above the 93 mark and gold remains stable, waiting for Powell to speak at the annual meeting of global central banks
On August 26, the US dollar jumped from a one-week low and once again rose to the 93 mark. Prior to this, the two major hawks of the Federal Reserve urged policymakers to act quickly to slow down asset purchases. These remarks pushed the US dollar to a key resistance level. The Fed’s annual seminar in Jackson Hole has opened, and Powell’s speech has attracted much attention. Spot gold was basically stable, closing at 1,792.44 US dollars per ounce, after a sharp fall due to the strength of the US dollar. Oil prices fell and stopped rising for three consecutive years. Burundi oil fell by more than 1%. Analysts said that market risk appetite has cooled and global stock markets have generally weakened to suppress oil prices.

On Thursday (August 26), the U.S. dollar index rose again to the 93 mark. The U.S. dollar against G-10 currencies rose across the board as the market waited for Fed Chairman Powell's speech on Friday. The Canadian dollar was among the top decliners due to falling oil prices. Gold futures prices closed slightly higher. Investors pay close attention to the Fed's Jackson Hole policy seminar, hoping to find clues about the Fed's reduction of debt purchase plans. Oil prices closed down by more than 1%, ending a three-day rally. The increase in new crown infections caused concerns about demand. At the same time, a drilling rig in Mexico resumed some production after supply was interrupted due to a fire.
Commodity closing, COMEX December gold futures closed up 0.2%, at 1,795.20 US dollars per ounce. WTI October crude oil futures closed down 0.94 US dollars, or 1.37%, to 67.42 US dollars per barrel; Brent October crude oil futures closed down 1.18 US dollars, or 1.63%, to 71.07 US dollars per barrel.
US stocks closing situation: The Dow Jones index closed down 192.38 points, or 0.54%, to 35,213.12 points; the S&P 500 index closed down 26.38 points, or 0.59%, to 4,469.81 points; the Nasdaq Composite Index closed down 96.1 points, or 0.64% , Reported 14945.8 points.
Friday preview
time | area | index | The former value | Predictive value |
07:30 | Japan | August Tokyo CPI annual rate (%) | -0.1 | -0.3 |
09:30 | China | Annual profit rate of industrial enterprises above designated size in July-single month (%) | 20 | |
20:30 | America | July PCE price index annual rate (%) | 4 | 4.1 |
20:30 | America | July core PCE price index annual rate (%) | 3.5 | 3.6 |
20:30 | America | Initial value of monthly rate of wholesale inventory in July (%) | 1.1 | 1 |
20:30 | America | Monthly rate of personal expenditure in July (%) | 1 | 0.4 |
20:30 | America | August University of Michigan Consumer Confidence Index Final Value | 70.2 | 70.8 |
01:00 AM | America | The total number of wells drilled in the United States for the week ending August 27 (ports) | 503 | 506 |
01:00 AM | America | The total number of oil rigs (mouth) for the week ending August 27 | 405 | 409 |
22:00 Fed Chairman Powell will deliver a speech at the Jackson Hole Global Central Bank Annual Conference
List of major global markets
All three major U.S. stock indexes closed lower on Thursday. The S&P 500 and Nasdaq fell for the first time in six days. They had previously set record closing highs in succession. The market was worried about developments in Afghanistan and concerns about possible changes in Fed policy triggered. A broad but small sell-off. The Jackson Hole seminar will be held on Friday.
Dallas Fed President Kaplan made a hawkish speech, and after the explosion outside Kabul Airport in Afghanistan, the selling momentum intensified, helping to increase risk aversion. Kaplan said that he believes that the progress of the economic recovery proves that the Fed has reason to start reducing its asset purchase program in October or shortly thereafter. He is currently not a voting member of the Federal Open Market Committee (FOMC).
Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, said that Kaplan’s speech made people a little confused about the reduction schedule, but in my opinion, the stock market is concerned about geopolitical issues. During geopolitical tensions, people are buying safe assets. .
Precious metals and crude oil
Spot gold was basically stable on Thursday, closing at $1,792.44 per ounce. It had fallen sharply due to the strengthening of the U.S. dollar. Investors expected the Fed to announce its position on reducing economic support at the Jackson Hole seminar.
On Wednesday, as the US dollar weakened the attractiveness of gold, the price of gold fell 1.2% and fell below the key $1,800 mark. Investors are paying close attention to Fed Chairman Powell's speech at the seminar on Friday. Earlier, St. Louis Fed Chairman Brad hinted that the Fed should end its bond purchase program early next year.
Jeffrey Christian, managing partner of CPM Group, said that the possibility that most people are concerned about is that the Fed hints that the economy will strengthen in the next year or two and will gradually reduce the scale of bond purchases, which is covering the gold market. Christian attributed part of the rise in gold prices to political tensions in Afghanistan.
Crude oil prices closed down by more than 1%, ending a three-day rally. The increase in new crown infections caused concerns about demand. At the same time, a drilling rig in Mexico resumed some production after supply was interrupted due to a fire. The possibility of other supply disruptions limited the decline. Energy companies are preparing for the possibility of a severe storm hitting the U.S. Gulf Coast this weekend. Analysts said the general weakness in global stock markets also suppressed oil prices.
The National Hurricane Center said that a storm brewing in the Caribbean may escalate into a major hurricane and hit the U.S. Gulf Coast on Sunday. This hurricane with wind speeds of up to 111 miles (178 kilometers) per hour is classified as a major hurricane and can cause devastating damage to shore.
John Kilduff, a partner at Again Capital LLC, said that oil companies were prepared before the storm, which provided some support for the market and to some extent offset the fear of more supply entering the market.
Foreign exchange
The U.S. dollar jumped from a one-week low on Thursday, after two regional Fed chairmen hinted that the Fed would speed up its asset purchase plan. These remarks pushed the U.S. dollar to a key resistance level. Volatility in the foreign exchange market eased before Powell's speech, and the implied volatility of the euro against the dollar fell to a one-week low.
The U.S. dollar index broke through the key resistance level of 93 and rose 0.26% to 93.06; on Wednesday, the index fell to 92.80 for the first time since August 17; the U.S. dollar index rose slightly after St. Louis Federal Reserve Chairman Brad’s remarks. Brad is seen as a hawk in policy. Brad said in an interview that he doubts whether inflation will slow, so the Fed needs to start scaling back its bond purchase program. We must start to reduce the scale of debt purchases and end debt purchases in the first quarter of next year. Then we can assess inflation.
Dallas Fed Chairman Kaplan said that the strong momentum of the U.S. economy still makes the Federal Reserve expected to start reducing the scale of monthly bond purchases in October or soon after.
Steven Ricchiuto, US chief economist at Mizuho Securities, said that the US dollar index rose above 93 two weeks ago and has since been testing this level as a support level. The market may discount Brad’s remarks, partly because he does not have the right to vote on the Fed’s policy-making committee, but Ricchiuto said his voice can be heard in the conference room, so you have to assume that it does. Have some impact.
When Brad and Kaplan made the above remarks, the Fed's annual seminar in Jackson Hole, Wyoming has opened, and Fed Chairman Powell's speech on Friday has attracted much attention.
Analysts doubt whether Powell will provide new hints on when the Fed may begin to cut asset purchases.
State Street Global Markets (State Street Global Markets) North American multi-asset strategy director Lee Ferridge said that Powell will reiterate Kaplan’s message last week that to remain flexible, if the market does not fluctuate when he speaks, then Powell’s performance is good. He does not want the market to panic because of the reduction in debt purchases when the economy is slowing. He will always do so, that is, leaving debt reduction options on the table, but at the same time, he also put forward the idea of flexibility.
The euro to US dollar fell 0.117% to $1.1752. Options traders believe that the news from the Jackson Hole meeting is less likely to boost the euro market. The dollar rose 0.42% against the Swiss franc to 0.9178.
The pound fell 0.46% to 1.3700 against the dollar; after Fed official Brad made hawkish remarks, hedge funds and large medium- and long-term investors dumped the pound.
The Australian dollar fell 0.54% to 0.7237 against the US dollar; the New Zealand dollar fell 0.37% to 0.6948 against the US dollar.
The decline in oil prices put pressure on the Canadian dollar; the U.S. dollar rose 0.76% to 1.2687 against the Canadian dollar; State Street Global Markets’ Ferridge said that due to economic growth expectations, the uncertainty of the Canadian election and the recent decline in commodity prices, the Canadian dollar has not exceeded 1.25 against the U.S. dollar. level.
International news
[Dallas Fed President Kaplan: Maintain his expectations of the US economic outlook unchanged, and still lean toward the FOMC's decision to begin to reduce QE at the September monetary policy meeting. It is advocated that the Fed should not implement QE reduction and interest rate hikes at the same time, and prefer the Fed to quickly start the QE reduction process and proceed in a gradual and orderly manner. The Fed’s move to reduce QE lasted for about eight months. The companies I contacted stated that they are defending against the impact of the mutated delta strain of the new crown pneumonia. With the increase in the new crown vaccination rate, we see more economic resilience. The Fed’s bond purchases support demand, but the demand side is not inherently a problem. Unexpected effects/side effects of bond purchases make me worried]
[St. Louis Fed President Brad: Inflation is higher than expected. In 2022, inflation will reach at least 2.5%. The Fed should "start" to reduce the size of its debt purchases, ending in the first quarter of 2022. The economy has learned to adapt to the epidemic. The completion of debt reduction at the end of the first quarter of 2022 will give the Fed an option. The economy is booming and no more stimulus is needed. Don't want too high inflation, which will hurt the poor in the United States. Financial stability is a good reason to reduce the scale of debt purchases. Rising house prices are a problem, don't be complacent. I don't think the US real estate market is in trouble today. Support the Fed to reduce the scale of debt purchases and reduce its balance sheet]
[Minutes of the European Central Bank Meeting: The new forward-looking guidance does not necessarily mean that lower interest rates will be implemented longer.] The implementation of low interest rates will last longer." The composition of the new forward guidance proposed by Chief Economist Lane is "widely considered to be very balanced." The new strategy and interest rate guidelines are seen as reducing the risk of possible side effects because it should help shorten the time to implement extremely low interest rates and reduce the amount of asset purchases required under all other conditions being equal. Participants generally agreed to postpone the discussion on the forward-looking guidelines of the Asset Purchase Plan (APP) to a future meeting.
[European Central Bank Governing Committee Villeroy: Supply restrictions drive inflation higher than the central bank’s forecast] The European Central Bank Governing Committee Villeroy said that supply restrictions have caused prices to rise faster than the European Central Bank expected, but this effect may be temporary. . Supply-side difficulties will push inflation higher than our expectations in the short term, but given the experience of previous economic recovery, we still believe and hope that these supply-side difficulties are temporary.
Domestic news
[Local version of the carbon peak road map released intensively] Under the guidance of the "dual carbon" goal, the local version of the carbon peak road map is accelerating to surface. According to the "14th Five-Year Plan" disclosed by various localities, Shanghai, Beijing, Jiangsu and other provinces and cities have put forward the requirements of striving to be the first to achieve carbon peaks in advance. Specific implementation plans at the local level have recently been released intensively. On the whole, optimizing the industry and energy structure is still the “highlight”. It is worth noting that while strictly controlling the "two highs" projects, many places have also increased positive guidance through the construction of near-zero carbon emission demonstration zones. (Economic Information Daily)
[Zheng Commercial Exchange: Starting from the night trading on the night of August 27, 2021, non-futures company members or customers have opened single-day positions on thermal coal futures 2109, 2110, 2111, 2112, 2201, 2202, and 2203 contracts The maximum quantity is 200 lots. From the settlement on September 3, 2021, the trading margin standard for thermal coal futures 2110, 2111, 2112 and 2201 contracts will be adjusted to 30%, and the trading margin standard for thermal coal futures 2202, 2203 contracts will be adjusted to 20%]
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