The key highlight of this week is Fed Chair's Powell speech on 23rd August at Jackson Hole. We believe he does not gain by committing to a 50bps cut instead risks loosing Fed's hard earned credibility. We believe that he might indicate for the onset of rate cuts but more as a dial back of current restrictive stance rather than a full about turn on the last 2 year's monetary tightening process. This implies a more shallow 100-125 bps cut in near term but no clarity beyond that for medium term with r-star uncertain and policy risks evident following the US election. We also get to see the Eurozone wage data & flash PMIs which might push ECB for a total of 50 bps cut in REMCY24. In Asia, we expect to see a still elevated CPI in Japan on 23rd Aug. With BOJ Governor Ueda testifying in Japanese parliament on 23rd Aug along with Fed Chair Powell in JH same day, we expect USDJPY to remain volatile with a depreciating bias towards 152 levels.
