r-squared macro
August 22, 2016
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Fed to Drive Week Ahead

Speculation about U.S. monetary policy will dominate discussion this week, followed by economic indicators in the Eurozone and a potential rate cut in Turkey. 

U.S. policy drives sentiment. In the wake of Thursday’s minutes release, investors will be anticipating Chair Yellen’s annual speech at Jackson Hole this Friday. The Fed’s July minutes reaffirm that the Bank is moving towards its dual mandate — albeit slowly — and upbeat commentary from Vice Chairman Stanley Fischer on Sunday challenge the Bank’s lingering dovishness. Chair Yellen’s outlook will either support or undermine the assumption that a 2016 rate hike is still on the table. A revised estimate of U.S. growth in the second quarter, currently recorded at 1.2% yoy, is unlikely to change on Friday.

Preliminary Eurozone PMI. Indication of Eurozone manufacturing in August is due from several Eurozone economies, in addition to the bloc as a whole, on Tuesday. PMI data across the region has been lackluster so far this year, and it is unlikely to improve in August given still-low global growth. August PMI will either support or undermine investors’ belief that Eurozone confidence has suffered post-Brexit.

Turkey eyes rate cut. Over the past several months, the Central Bank of Turkey has been narrowing its interest rate corridor to ease lending conditions and simplify its policy framework. Following last month’s attempted military coup, the Bank is likely to cut rates on Tuesday to buoy confidence in the Turkish economy. The lira’s recovery post-coup attempt will eliminate a risk for the Bank’s potential rate cut.

http://rsquaredmacro.com/fed-to-drive-week-ahead/ 
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