From analysts at Credit Agricole
Credit Agricole CIB FX Strategy Research notes that the USD has rebounded from the lows, particularly against the low-yielders such as the JPY and CHF, but argues that there is little to suggest we are on the cusp of a significant USD recovery.
In that regard, CACIB expects the Jackson Hole symposium discussions to be focused on the low inflation phenomenon in the US and globally, evaluating the different aspects of the structural changes in the economy.
"Even without delivering a particular policy signal, the tone of the discussion is likely to reinforce expectations of only very gradual Fed policy normalisation (technical papers will be announced the night before the event starts).
The USD's main hurdle is that the next rate-tightening move is still several months away, and the market will be reluctant to price in greater probability of a hike given the uncertainty regarding data and fiscal policy in the months ahead," CACIB adds.
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