The

renewed risk appetite in a week where most of the focus is on Fed

Chairman Powell's speech in Jackson Hole suggests that the market is not

thinking about an immediate reduction in the asset purchase program

discussed at the Fed's last meeting.

It

is unlikely that we will hear any details on the pace or duration of

the interest rate cut as that would have to be agreed upon and announced

at an FOMC meeting. It is likely that Chairman Powell will repeat many

of the comments made in the minutes, including that most FOMC members

favor an announcement on the gradual reduction of the asset purchase

program, depending on macroeconomic data.

At

a time when global growth may be peaking, markets won't want to start

worrying about the U.S. economy. If Powell is too ardent about the

risks, he could cause the dollar to react with a risk-off mode, as we

saw after the disappointing US retail sales and consumer confidence

numbers. Alternatively, if he doesn't give much time to risk and focuse

on the recovery and the merits of monetary policy normalization, the

dollar should also rally.

The

bears need him to pull off this balancing act. As you can see, it is

more likely that the elements are there for a continued rise in the

greenback.

(Chart Source: Tradingview 27.08.2021)

Disclaimer:

This material has been created for information purposes only. All view

expressed in this document are my own and do not necessarily represent

the opinions of any entity.