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August 26. Macroeconomic events of the day | August 26​​​​​​​

On Friday, all the attention of the markets is focused on the speech of the head of the US Federal Reserve Jerome Powell at the symposium in Jackson Hole. It is expected that the regulator will confirm its intention to curb inflation, but will not announce the details of its next steps. Many expect an interest rate increase of another 0.75 percentage points in September, while others expect a smaller increase, by half a point.

Powell's speech will take place after the publication of a block of economic data, including on the PCE index, as well as on the expenses and incomes of Americans.

PCE Index

The Personal Consumption Expenditure Index (PCE), the Fed's most preferred inflation indicator, will be published at 12:30 GMT. Analysts expect the underlying PCE to increase by 4.7% compared to last year and by 0.3% compared to the previous month.

Expenses and incomes of Americans

At the same time (12:30), statistics on personal expenses and incomes of Americans will be published. Personal expenses are projected to grow by 0.4% and personal income by 0.6%.

It is noted that middle- and low-income households feel disadvantaged due to rising prices for all basic goods, so they are forced to reduce their expenses. At the same time, retailers are lowering prices to get rid of inventory in preparation for the holiday season.

Powell's performance at Jackson Hole

Despite general expectations, the speech of the head of the Fed is unlikely to bring any specifics to the market. Moreover, before the regulator announces its next decision on the rate, several more important economic data will be published, including inflation and the employment report.

August 29. Powell's speech provoked the growth of the dollar

On Monday, the US dollar reached a 20-year high against major currency competitors after the speech of the head of the US Federal Reserve Jerome Powell at a symposium in Jackson Hole on Friday. The dollar index peaked at 109.48 points today.

In particular, Asian currencies fell: the Chinese yuan reached a new 2-year low of $6,9321, and the Japanese yen fell to 138.88 against the dollar. The Australian dollar fell to $0.6858, and the New Zealand dollar fell to $0.6109. Paired with the European currency, the dollar rose to $0.9944.

The head of the US regulator said that the Fed does not plan to make «dovish» changes to its rhetoric and intends to further raise the base rate to combat rampant inflation. Powell also warned that the growth of the US economy could be undermined by a rate hike, as households and businesses will inevitably face a number of problems before consumer price growth can be contained.

After the politician's speech, an increasing number of analysts began to predict a rate hike at the September meeting by 75 basis points. The rate is expected to exceed 3% by the end of the year.

Now all the attention of the markets is focused on Friday's report on employment in the United States (Non-Farm Payrolls). A strong report on the labor market may give the Fed additional opportunities to maintain the current pace of monetary policy tightening.

August 30. Oil prices are recovering moderately after yesterday's fall​​​​​​​

World oil prices are recovering weakly on Tuesday after falling below the level of $100 per barrel. A day earlier, Brent was trading at $103.25 per barrel.

The possible prospects for a reduction in oil supply and a decrease in demand in the markets led to an increase in prices yesterday. Investors' fears intensified after the statement by the Saudi Energy Minister that OPEC may cut production.

At the same time, expectations of an increase in demand appeared after the statement of the famous entrepreneur Elon Musk that humanity may soon need more oil and gas, since without fossil energy carriers «civilization will collapse.»

In addition, the situation in Libya affects the dynamics of the oil market. Over the weekend, clashes between two armed groups took place in Tripoli, as a result of which more than 30 people were killed. This has raised fears that Libya is waiting for another full-scale conflict, as a result of which oil supplies to the world market will be reduced.

Meanwhile, the volume of production in the country remains at the same level of 1.2 million barrels per day, as reported by the state-owned Libyan oil company National Oil Corp.

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August 31. Inflation in the eurozone in August reached a record 9.1%​​​​​​​

According to the Statistical Office of the European Union, consumer prices in the eurozone increased by 9.1% in annual terms in August. In July, the price increase was 8.9%, so inflation accelerated again and updated the maximum since the beginning of calculations.

The fresh indicator exceeded the forecasts of analysts who expected less significant growth – by 9%. Inflation exceeds the European Central Bank's target of 2% by more than four times.

The CPI index (consumer prices excluding food and energy) in August increased by 4.3% year-on-year compared with 4% in July.

Energy resources increased in price by 38.3% compared to August last year, but the growth rate slowed down slightly compared to the rise of 39.6% a month earlier. Food, alcohol and tobacco rose by 10.6% (by 9.8% in July), industrial goods – by 5% (by 4.5%), services – by 3.8% (by 3.7%).

On a monthly basis, consumer prices increased by 0.5% in August. In July, this indicator increased by 0.1%.

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September 5. The pound has collapsed to its lowest since 1985​​​​​​​

On Monday, the British pound collapsed to its lowest since 1985. At the moment, the exchange rate of the GBP/USD currency pair fell to the level of $ 1.1444, losing 0.55%.

The main pressure on the pound sterling is exerted by the current strengthening of the US dollar, as well as the economic situation in the UK itself. Analysts fear that due to the energy crisis in the country, many households will not be able to pay bills in winter.

In addition, doubts about the ability of the Bank of England to cope with record inflation are another factor for the weakening of the British currency. Experts expect that inflation in the UK will reach 22% next year due to an increase in the cost of energy resources, which could lead to a fall in the economy by 3.4%.

Additional pressure on the pound is exerted by uncertainty about the economic policy of the new British Prime Minister Liz Truss. Today it became known that Truss, the British Foreign Minister, was elected head of the Conservative Party and prime Minister of the country. Truss scored 81.3 thousand votes, thus overtaking ex-Finance Minister Rishi Sunak, for whom 60.4 thousand people voted.

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September 6. The pound is growing on the promises of the new British Prime Minister​​​​​​​

The British pound is rising on Tuesday after the publication of more detailed information about how Liz Truss, who became the new prime minister of Britain, intends to deal with the energy crisis in the country.

It is reported that in October, electricity and heating tariffs for households were supposed to be increased by 80%, but Truss promised that she was going to freeze tariffs for this winter. And this may cost the country's budget more than the employment support program during the pandemic.

As a result, the British pound managed to move away from the lows of 1985, which the currency approached during yesterday's trading ($ 1.1444 per 1 pound). The current quote of the GBP/USD pair is $1,1609. At the same time, analysts note that the pound continues to remain near the lows for 2.5 years amid concerns about the price that the UK will have to pay for the support of the population.

It is worth noting that the country's public debt has already grown to almost 100% of GDP from 80% before the pandemic. In general, during the pandemic, sterling declined against the US dollar by 15%, the annual inflation rate exceeded 10%, and economic growth almost stopped.

During her election campaign, Truss hinted at lower taxes, which led to a decline in UK government bonds. In August, the drop in their prices was the deepest in several decades, because investors feared a balance of payments crisis.