Jackson Hole Eyed

The Jackson Hole symposium of central bankers
is set to be the main focal point for the week ahead.  The reason the event is key is that it is
anticipated that the tone will be set for Fed policy going forward which is
exactly what happened back in August 2010. 
The market is hoping that QE3 will be implemented soon and following the
last FOMC minutes hinting at further easing it is hoped that Ben Bernanke will
outline this is his Jackson Hole speech. 
We have a few snippets of US economic data which will keep the markets
alert before the meeting. The USD has
weakened last week in anticipation of more QE
from the Fed- however the sentiment of a positive outcome is starting to turn
more negative ahead of the symposium.

Elsewhere we saw the French and German
finance ministers kiss and make up and promise to work together on a solution
to the eurozone crisis. They’ve agreed to form a joint policy making body to
create a more integrated economic and fiscal policy within the Eurozone and to
form a new banking supervisory board.

The new policy making body will be designed
to help the failing southern European states such as Greece, Italy and Spain
and will help to create longer-term strategies, which the Germans hope will eventually
lead to full scale political union within the Eurozone.  The Euro is holding firm on the perception
that more momentum on solutions is being sought and that the ECB
remain ready to step in and act in the near term.

This week we also have the German Ifo survey
where a further decline is expected and German CPI
which is expected to have nudged higher. 
Expect the FX markets to remain range bound until we have further
clarification on Friday.

Report By Phil Mchugh