Traders Reluctant Ahead Jackson Hole
Not much was going on in the FX market on Tuesday as traders are holding back ahead of the Jackson Hole symposium which takes place from Thursday through Saturday. Chances are currently in favor of riskier assets with the market preparing for a potential delay in the Federal Reserve’s taper timeline. The fast-spreading Delta variant may cause policy makers to potentially rethink the Fed’s taper timeline, which is why we might not get a hawkish surprise at the symposium. Continued central bank stimulus would represent a significant tailwind for risk assets and would thus lead to a sell-off in the U.S. dollar.
Traders should therefore be prepared for a potential short squeeze in the EUR/USD and GBP/USD.
Fed Chair Powell is scheduled to speak at the Jackson Hole symposium on Friday at 14:00 GMT.
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