No this is not the heading of today's note but the topic of Jackson Hole economic symposium, where global central banks, academia and economists meet to share their ideas.
This is an annual event where all leading central banks along with other participants meet. Normally, central banks avoid throwing any surprise to the market from the symposium but given the forward looking topic of the symposium- Structural Shifts in the Global Economy, market would be looking through each and every word muttered by the leading central banks, esp. Powell to take any market moving cue.
Given the topic and its importance in present context, it would be of utmost interest for market participants to see if central banks drop hint or talk about looking at revising the decades old inflation target, in the back-drop of changing global landscape, ranging from emergence of muti-polar world (geo-political risk), push for regional economic and trading blocs, re-shoring etc.
At the end, no central bank likes to see missing the inflation target for months or years, due to factors outside of their control.
Coming back to rupee, I still see downside risk in local unit (rupee weakness) despite last two days sharp appreciation, driven largely by central bank verbal intervention (asking banks to avoid building fresh arbitrage position, as per Reuters news) and anticipation of large lumpy flow from a corporate.
The timing of Intervention was surprising from the fact that first rupee was allowed to trade and close above 83.00 level for 3 days and then suddenly came the intervention. To our mind, it has more to do with upcoming Jackson Hole meeting (event risk), than anything else. It is easier to manage the expectation (say narrative), when rupee is 0.70/0.80p away from all time low (83.28) than when it is trading just 0.10/0.15p away all low time low.
Powell is going to speak at 7:35 pm
This is an annual event where all leading central banks along with other participants meet. Normally, central banks avoid throwing any surprise to the market from the symposium but given the forward looking topic of the symposium- Structural Shifts in the Global Economy, market would be looking through each and every word muttered by the leading central banks, esp. Powell to take any market moving cue.
Given the topic and its importance in present context, it would be of utmost interest for market participants to see if central banks drop hint or talk about looking at revising the decades old inflation target, in the back-drop of changing global landscape, ranging from emergence of muti-polar world (geo-political risk), push for regional economic and trading blocs, re-shoring etc.
At the end, no central bank likes to see missing the inflation target for months or years, due to factors outside of their control.
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Coming back to rupee, I still see downside risk in local unit (rupee weakness) despite last two days sharp appreciation, driven largely by central bank verbal intervention (asking banks to avoid building fresh arbitrage position, as per Reuters news) and anticipation of large lumpy flow from a corporate.
The timing of Intervention was surprising from the fact that first rupee was allowed to trade and close above 83.00 level for 3 days and then suddenly came the intervention. To our mind, it has more to do with upcoming Jackson Hole meeting (event risk), than anything else. It is easier to manage the expectation (say narrative), when rupee is 0.70/0.80p away from all time low (83.28) than when it is trading just 0.10/0.15p away all low time low.
Powell is going to speak at 7:35 pm
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