United States stocks flat ahead of central bank summit

USD  CAD Daily Chart

The FTSE 100 followed its European peers into the red on Monday, as investors looked ahead to United Kingdom growth figures and central bank news from the US Federal Reserve's Jackson Hole conference on Thursday.

Despite recent losses, it is still up more than 11 percent this year, making it the best performing currency in the G10 currency space.

A lot of the discussion surrounding current Chair Janet Yellen's participation at this year's Jackson Hole symposium is regarding her coming to the end of her term as Fed Chief.

"We expect nothing groundbreaking from Yellen", said TD Securities in a note. Still, at a time when inflation is low across developed economies, baffling authorities who thought declining unemployment would push up wages and prices, any contribution they make at the conference could shed light on how much attention they're paying to recent weak prices.

With positioning getting so stretched most major institutions have been calling for a bigger dip in EUR/USD, but so far things haven't played out as expected.

"The weight of euro positioning has finally stopped this advance we have seen over the last few months".

South Korean and USA forces began computer-simulated military exercises on Monday in the wake of North Korea's weapons programs, angering the Asian communist regime. Another influence on euro strength may be ECB President Mario Draghi's speech in Jackson Hole towards the end of the week. While Cohn does not have a track record on monetary policy, in 2015, Cohn questioned Yellen for preparing to hike rates, saying she had "no legitimate argument to raise rates without inflation being close to - or having some inkling that it's approaching - 2%". On the downside, 1.46 is likely seen as the next support level for the euro. But it flags the fact that the European Central Bank has already said Draghi will focus on the conference theme "and avoid dealing with sensitive monetary policy matters".

The benchmark 10-year U.S. Treasuries yield skidded to 2.162 percent on Friday, its lowest since late June, before closing at 2.194 percent.

Traders will also be looking to India's Infosys after its shares tumbled more than 5 percent on Monday despite the company's $2 billion share buyback plans announced at the weekend.

Draghi may therefore choose to strike a cautious tone - expressing optimism over the economy but steering clear of signaling his thoughts on tapering until September 7, when the Governing Council meets and he holds a press conference.

The NZDUSD opens at 0.7325 (mid-rate) this morning.

The US June 30 earnings season has nearly exhausted itself - a few retailers such as Abercrombie and Fitch, Guess?, Dollar Tree, Burlington Stores, Tiffany, American Eagle, Lowes Cos, JCrew and Williams Sonoma are expected to report.

Sempra Energy rose 1.6 per cent after it reached a deal to acquire Oncor, a Texas energy distributor, for US$9.45 billion in cash and US$9 billion in assumed debt, topping a bid by Warren Buffett's Berkshire Hathaway.



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