USD

The U.S. dollar index, which tracks the performance of the greenback against a basket of six major currencies, eased down its bullish run amid Fed officials refraining from tapering the economic stimulus due to the persistent Delta variant, which registered 149k daily cases in the country. The greenback initiated a corrective move, reversing some of its gains ahead of PMI figures due later today. The risk-off mood from last week was induced by Fed expectations that tapering will come sooner rather than later. However, the persisting Delta variant seems to keep policymakers cautious, as Robert Kaplan, President of the Dallas branch of the Fed, said he would consider postponing tapering the stimulus programme in response to the impact of the Delta Covid variant. Kaplan is known for his hawk position in relation to the monetary policy and has previously pushed for tapering the bond purchase scheme. The market seems to have taken a breather following the dovish comments from Kaplan, nurturing a risk-on sentiment with a focus on Jackson Hole Symposium, which starts on Thursday. The speech from Fed chair Jerome Powell on Friday will be held online due to the severe increase in Covid cases. Market participants now speculate that Powell will use the symposium to signal a delay in withdrawing stimulus, cheering for ongoing support to the economy in addition to rumours that the White House is likely to extend the Chairman’s term for another four years. Moreover, this week we expect an interesting flow of data, with Durable Good orders on Wednesday, followed by Core Personal Consumption Expenditures, and Gross Domestic Product figures on Thursday. The week will close with inflation data and consumer sentiment on Friday. 

• On Monday (08/23): Chicago Fed National Activity Index ¦ Markit Manufacturing PMI (PREL) ¦ Markit Services PMI (PREL) ¦ Markit PMI Composite 
• On Tuesday (08/24): New Home Sales 
• On Thursday (08/26): Durable Goods Orders ex Transportation ¦ Core Personal Consumption Expenditures ¦ Durable Goods Orders ex Defense ¦ Personal Consumption Expenditures Prices ¦ Durable Goods Orders ¦ Initial Jobless Claims ¦ Nondefense Capital Goods Orders ex Aircraft 
• On Friday (08/27): Core Personal Consumption Expenditures - Price Index ¦ Personal Income ¦ Personal Spending ¦ Michigan Consumer Sentiment Index

EUR

The EUR is reversing its latest bearish run, bouncing back from its year-to-date lows, and it has held to its gains during the course of the Asian trading session. On Friday, Germany released its Producer Price Index figures for July, posting an upbeat 10.4% annualized, exceeding expectations set at 9.2%. The upbeat results, combined with a  lack of relevant data in the U.S. that shows it’s feeding the recovery of the EUR, sustained until the early hour of today's trading session. However, Preliminary Markit PMI figures failed to impress, posting figures marginally below market consensus suggesting an expansion in the recovery. Later today, Consumer Confidence could be a key indicator that could bring renewed impetus to the pair. The week ahead will bring speeches from several European Central Bank (ECB) members, with Schnabel on Tuesday, an intervention speech from De Guindos on Wednesday, and the ECB monetary policy meeting accounts which will be held on Thursday.

• On Monday (08/23): Markit Manufacturing PMI (PREL) ¦ Markit Services PMI (PREL) ¦ Markit PMI Composite (PREL) ¦ Consumer Confidence (PREL)

GBP

The British Pound stepped up firmer during the early hours of the trading, signaling stabilization for the currency amid improvements in the global risk environment. However, Friday released unexpectedly poor Retail Sales figures, posting a contraction of 2.5% in July while the market was expecting a 0.4% growth. The week ahead will have its focus on the Fed showdown amid the Jackson Hole symposium, with the only British data input being from today’s PMI figures, which released mixed results. Markit Manufacturing PMI exceeded expectations posting 60.1 vs 59.5, while Markit Services PMI failed to impress with a poor 55.5 vs 59 previously anticipated amid ongoing Delta variant jitters weighing on the services sector.  

• On Monday (08/23): Markit Manufacturing PMI ¦ Markit Services PMI 

JPY

The Japanese Yen struggles amid rising Delta variant cases and downbeat economic data, while U.S. Treasury yields edge higher. The Japanese currency has failed to benefit from its safe-haven appeal due to detrimental conditions in Japan due to the outburst of the Delta variant keeping the country on the back foot. The U.S. Treasury yields started the week 0.4% higher, attracting foreign flows weighing on the JPY. Following the announcement from government officials approving the emergency budget, Japan’s minister, in charge of the Coronavirus response, suggested tougher measures to curb infections under the current law. Additionally, Jibun Bank Manufacturing PMI preliminary figures also failed to impress, avoiding any support for the Yen at this stage after readings posted 52.4 vs 53.4 previously anticipated. On Wednesday, the Leading Economic Index will provide an interesting insight into the performance of the Japanese economy while on Thursday Tokyo Consumer Price Index will share a taste of the price activity. 

• On Wednesday (08/25): Leading Economic Index 
• On Thursday (08/26): Tokyo Consumer Price Index 

CAD

The Canadian dollar remained on the backfoot during the course of the previous week amid risk-off sentiment weighing on risky assets and commodities. During Friday's session, the pair extended further losses against the dollar, recording prices last seen in December 2020, despite reversing the move amid risk-on sentiment nurturing the Loonie. The West Texas Intermediate (WTI) continues to edge lower, looking to snap its 7th consecutive session recording losses hovering below 63 dollars per barrel, a price last seen in March 2021. Despite the low crude oil prices which refuse to underpin the loonie, Fed official interventions refraining from tapering the stimulus programme seems to be inducing a broader dollar weakness ahead of the highly expected Jackson Hole Symposium which will be the main driver of this week. Data-wise, a very low flow is expected, with Friday releasing Raw Material Price Index and Industrial Product Price Index.    

• On Friday (08/27): Raw Material Price ¦ Industrial Product Price Index

MXN

The Mexican Peso extended losses in Friday’s session amid risk-off sentiment in global markets and oil prices removing any support from the currency. However, fundamentals in Mexico sustain improvements, with unemployment figures falling from 4.8% in August 2020 to 4.2% amid the global pandemic. The week ahead has an interesting flow of data for the Mexican currency, kicking off the week with Retail sales on Monday and indicative inflation figures on Tuesday. Mexican Gross Domestic Product figures and Current Account estimates will be published on Wednesday, while Jobless Rates will confirm the labour market trend amid the recovery of the pandemic.

• On Monday (08/23): Retail Sales 
• On Tuesday (08/24): Bi-weekly CPI
• On Wednesday (08/25): Gross Domestic Product ¦ Economic Activity ¦ Current Account Balance
• On Thursday (08/26): Unemployment Rate ¦ Central Bank Monetary Policy Minutes
• On Friday (08/27): Trade Balance ¦ BBG Mexico Survey 

CNY

The Chinese Yuan is recovering lost ground amid restoring risk-on mood and investor appetite. Chinese authorities said that the Delta strain has been controlled, allowing for the lifting of lockdown measures imposed amid the presence of the Delta variant in the country. The encouraging news from China underpins optimism as fears of a Chinese economic slowdown kept the market mood and commodity prices on the back foot, and we could expect shifts in expectations amid the removal of Covid restrictions in the country. However, the tech crackdown keeps adding pressure to Asian equity markets especially after the last‘s renewed measures from Chinese authorities. Moreover, China has just passed a new law allowing families to have up to three children as the state realizes an imbalance between the aging population and low birth rates. 

• No calendar events for CNY*

BRL

The Brazilian Real strengthened 1.22% against the dollar during Friday's session after the pair reached prices last seen in April this year. The Brazilian market has been severely affected by adverse climatic effects, which has affected harvesting crops in the country. The Brazilian agriculture ministry announced that due to the recent Frosts in the country, the yield of the sugar cane harvest fell by 9.5%, extending previous estimates at 4% contraction. The report from government officials suggested that adverse climatic effects are responsible for the underperforming crops, with both a drought during the productive cycle and cold temperature in June influencing Frosts in certain cane-producing areas in Sao Paulo and Mato Grosso do Sol, diminishing the harvesting yields.  

• On Wednesday (08/25): FGV Consumer Confidence ¦ Current Account Balance ¦ Foreign Direct Investment
• On Thursday (08/26): FGV Construction Costs 
• On Friday (08/27): PPI Manufacturing ¦ Personal Loan Default Rate ¦ Total Outstanding Loans BBG Brazil Economic Survey ¦ Federal Total Debt ¦ Central Government Budget