North American Summary and Highlights 28 August
Overview - The USD bounced on a hawkish speech from Fed’s Warsh, which raised the risk of a September tightening.
North American session
The USD bounced on a hawkish Jackson Hole speech from Fed’s Warsh, which lifted bets on a September Fed tightening. The key sentence was: “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.” At the same time August’s Michigan CSI was revised up to 51.7 from 51.0 and the preliminary estimate for the March 2026 benchmark revision was a minimal -79k, both overshadowed by Warsh.
USD/JPY moved above 160, and EUR/USD fell below 1.16. EUR/GBP fell to .8560 from .8570 led by EUR/USD. EUR/CHF was slightly firmer, briefly touching .9380. AUD/USD fell to .7160 from .72 and USD/CAD rose to 1.39 from 1.3860. Earlier Q2 Canadian GDP rose by 3.3% annualized as expected, but with a healthy breakdown, domestic demand up 3.9% and a strong rise in net exports offset by an even sharper negative from inventories. The Canadian data had little impact.
European session
All quiet this morning as the market waits on Warsh’s comments, the dollar having very fractional support prior, with some assumption he will at least superficially sound hawkish or inflation-committed. Perhaps more interesting, comments On Thursday in the run up from other Fed speakers were all generally quite hawkish, albeit from the hawkish contingent.
French flash harmonised CPI 2.7% from 2.4%, rebounding on energy prices. Spanish HICP up to 4.5% from 3.9% if short of mkt at 4.6%. EZ Aug economic sentiment 98.4 from 97.1 (mkt 97.5).