Jackson Hole preview: what to expect from the Fed

S&P 500 Price Chart

S&P 500 Price Chart

Optimism about government action to calm US recession concerns, triggered by last week's inversion of the bond yield curve, grew ahead of the Federal Reserve's symposium later in the week in Jackson Hole, Wyoming, where analysts said central bankers could announce new measures.

China also unveiled interest rate reforms expected to lower corporate borrowing costs, which helped lift the market's mood, while the prospect of Germany's coalition government ditching its balanced budget rule to take on new debt and launch stimulus steps also boosted risk appetite.

A deglobalization shock ignited by President Trump's trade policy; super low interest rates, including $16.7-N in negative-yielding bonds; a never-ending presidential assault on the Fed; and a rising risk of a U.S. and worldwide recession are all topics that he will address. Visit MarketWatch.com for more information on this news.

Against the yen, the dollar was little changed at ¥106.37, near a one-week high of ¥106.98. Against the greenback, the euro rose 0.2 per cent to US$1.1114 in London trading after falling 1 per cent last week, its biggest weekly drop since early July.

U.S. Dollar Index increases 0.1% to 98.25. Sight deposits at the Swiss National Bank posted another big weekly rise, indicating more intervention from policymakers.

Investor optimism is also likely to be capped before a speech by Fed Chairman Jerome Powell later this week at the Jackson Hole conference.

"The Jackson Hole summit would be the flawless venue for the Fed to set or reset market expectations", said Kathy Lien, managing director of FX strategy at BK Asset Management.

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