MUFG notes that the Jackson Hole Symposium will be the next high-stakes event for the Fed in terms of offering up any policy communication. And given the circumstances, a repeat of last year - where a dovish guidance was explicit - is rather unlikely. The firm notes that Fed chair Powell is expected to lean on the cautious side and that will temper downside pressures on the US dollar in the near-term.
They also note that markets are pricing in the resumption of policy easing by the Fed and will look to Powell to validate those expectations. However, Powell may not choose to confirm the timing and buy more time to assess incoming data. If so, that could dampen downside pressures against the dollar with markets having to reassess their pricing on rate cuts.
The narrative here fits with the commentary from yesterday: Jackson Hole on the horizon for markets this week
