Overview of the US Dollar
The US dollar faces a pivotal week, with investors focused on 2024 Fed rate cuts amid speculation about a US hard economic landing.
FOMC Meeting Minutes and the Jackson Hole Symposium
On Wednesday, August 21, the FOMC Meeting Minutes will likely face investor scrutiny. Sentiment toward the US economy, the labor market, and the Fed rate path will influence US dollar demand.
However, speeches from the Jackson Hole Symposium will likely have more of an impact on US dollar demand.
The markets expect Fed Chair Powell to green-light a September Fed rate cut on Friday, August 23. Signals for November and December rate cuts could push the USD/JPY below 145. However, views on the US labor market could also be crucial.
US Services PMI and the US Economy
The S&P Global Services PMI, on Thursday, August 22, will influence investor sentiment toward the US economy.
Economists forecast the Services PMI to decline from 55.0 in July to 54.2 in August.
A weaker-than-expected PMI may rekindle investor fears of a hard US economic landing as the services sector accounts for over 70% of the economy.
Additionally, the employment and price-related subcomponents will be crucial. A slower job creation rate and softer input prices could bolster expectations of multiple 2024 Fed rate cuts. Furthermore, a sharp slowdown in the job creation rate could fuel speculation about a US hard landing.
A deteriorating US labor market could impact wage growth, disposable income, and consumer spending. Downward trends in consumer spending could affect the US economy as it contributes over 60% to GDP.
US Jobless Claims a Crucial Data Release
On Thursday, August 22, initial jobless claims could also influence sentiment toward the US economy and Fed rate path.
Economists forecast initial jobless claims to fall from 227k in the week ending August 10 to 225k in the week ending August 17.
A larger-than-expected fall in initial jobless claims might ease concerns about a hard landing, bolstering demand for the US dollar.
However, investors should consider the Services PMI and jobless claims data. Positive figures could push the USD/JPY toward 150. Conversely, weaker-than-expected numbers could signal a USD/JPY drop toward 143.
