Europe midday: Stocks come off lows, Jackson Hole in focus

Traders have got Friday on their minds as they wait for a big change in policy

Traders have got Friday on their minds as they wait for a big change in policy. Michael Nagle

With currency markets cheering the return of the ECB, the news wires have chosen the Jackson Hole symposium as the opening ceremony for a return of central bank related volatility as the policymakers go back to work.

The president of the European Central Bank (ECB) is set to deliver a speech on Friday at a high-profile conference in the Rocky Mountain resort of Jackson Hole, Wyoming.

With earnings dominating many markets, attention won't focus on economic issues until Friday when Federal Reserve chair Janet Yellen addresses the annual Jackson Hole conference in the USA which is hosted by the Kansas City Federal Reserve which sees major central bankers and others from around the globe meet for two days of discussions, speeches and networking.

The minutes dampened the market hopes of another interest rate hike later this year after the minutes showed that officials are still concerned regarding the current inflation rate and its recent performance. This was the lowest reading since April this year, with some 57.5% of analysts surveyed asserting that they expect economic activity to remain steady in the next six months, and the other 6.6% claiming it will get worse.

The US Dollar Index (UUP) managed to recover some of the losses it saw in the last few weeks. Despite the decreased number of USA personnel participating in the war games - which are an annual occurrence - North Korea said the drills were a "reckless" development, Reuters reported.

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Yellen's speech at the conference.

The summit, held at a Jackson Hole mountain retreat, comes as central banks in advanced economies creep toward the policy exit after years of unprecedented easing, even with outlooks clouded by stubbornly tepid inflation.

The kiwi traded at 73.11 U.S. cents as at 8:30am in Wellington from 73.12 cents in NY on Friday and up from 72.95 cents in Wellington at the end of last week. Mario Draghi's comments will attract just as much attention given the eurozone economy is solid and still growing to the point where markets expect the European Central Bank to start giving a schedule to unwind its hue quantitative spending campaign. Trump remains defiant and continues to attack his critics, but the events around Charlottesville have only served to tarnish his image and raised growing concerns about his presidency. The RBA said it would be willing to intervene to weaken the Aussie if it thinks it is appropriate, however, it had no plans to change monetary policy. EUR/USD dropped below the 1.17 line and touched 3-week lows.

USA stocks also looked set to open higher, with Wall Street futures up 0.2 percent.

"I therefore consider levels beyond (this month's) high of $1.1910 to be extremely risky ahead of Jackson Hole", she said. Thus, although we see the dollar clawing back some gains in the next week or so, we don't think that it will make a sustained recovery in the long term especially not against the euro and AUD.

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