Between the Jackson Hole Symposium, the BRICS Summit and Global PMIs, the week is loaded
Many economic releases are ahead of us today, in addition to the BRICS Summit. Yet, their impact might be limited, as all eyes remain on the main event this week, the Jackson Hole Symposium on Friday and Saturday.
The leaders of the five member countries have agreed to expand the bloc and work together to reduce their reliance on the US Dollar.
The leaders of BRICS have not yet announced which countries will be invited to join the bloc, but South Africa said that it has received expressions of interest from at least 20.
In addition to the expansion, the BRICS leaders discussed ways to reduce their reliance on the US Dollar. The Dollar is the world’s reserve currency, but it has come under increasing criticism in recent years. Some countries, such as China, have been calling for a new global reserve currency.
BRICS leaders did not announce any specific plans to create a new reserve currency, but they did agree to work together to reduce their reliance on the Dollar. This could involve using more local currencies in trade and investment or developing new financial instruments.
In short, all the talks about a new reserve currency over the past few months were only speculations. At the same time, even if they decide to introduce a new currency, it might take a long time until it gets recognized in the global system, while replacing the dollar as a reserve currency might not happen anytime soon.
Manufacturing and Services PMIs today
Throughout the next two sessions today, including the European and the US sessions, all eyes will be on the Manufacturing and Services PMIs from all over Europe, including France, Germany, the UK, and the Euro Zone, which might have a notable yet limited impact on the markets, unless it comes with a big surprise.
|French Manufacturing PMI||45.1||45.1|
|French Service PMI||47.5||47.1|
|German Manufacturing PMI||38.9||38.8|
|German Services PMI||51.5||52.3|
|Euro Zone Manufacturing PMI||42.8||42.7|
|Euro Zone Services PMI||50.6||50.9|
|UK Manufacturing PMI||45.1||45.3|
|UK Services PMI||50.9||51.5|
|US Manufacturing PMI||45.1||45.3|
|US Services PMI||50.9||51.5|
Silver outperforming Gold
Silver has been advancing for 5 days in a row including today’s trading, posting the longest gaining stake since July of last year, reaching as high as $23.67 so far. Such a rally comes after holding above the $22.20 support area, which remains solid since June. In the meantime, technical indicators are strongly bullish. Traders can move their stop to breakeven.
BoJ intervention is a matter of time
The Bank of Japan (BOJ) has not yet responded to the rise in Japanese 10-year bond yields to around 0.667%. This suggests that it is waiting for the yields to reach 0.7% before intervening in the market. This would be in line with the BOJ’s previous interventions, which have been triggered when yields have reached 0.6% and 0.65%.
The BOJ is hoping that this week’s Jackson Hole meeting of central bankers will produce a dovish narrative, which could ease upward pressure on global yields. This would be especially helpful if Federal Reserve Chairman Jerome Powell takes a more dovish approach than former Fed Chairman Paul Volcker, who is known for his hawkish monetary policy.
The intervention is a matter of time and could happen as soon as this week.
Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.
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