It is becoming clearer to me that central banks are less willing to undertake the heavy lifting all on their own. Take the ECB for example, which refused to budge on policy and refrained from easing. The extension of the QE program beyond March 2017 was seen as the most likely move, but we are told by Draghi, it was not even discussed by governing council. Perhaps it is an attempt to improve the efficacy of weakness on the euro when the next inevitable extension of easing is announced, but it could also be a nudge from the ECB to the national governments that they also need to play their part and engage fiscal stimulus. Draghi tries hard every press conference to emphasise the need for fiscal measures and structural reform, and perhaps national governments need to know that the ECB is not necessarily going to ease to infinity. Fiscal stimulus and structural reform was a bit of theme at Jackson Hole. Weak productivity amongst the world’s major economies is a problem that cannot be tackled purely through loose monetary policy. If anything loose monetary policy is exacerbating the problem as low corporate yields encourages firms to borrow to buyback shares rather than invest in hard assets and staff. The need for the Fed to normalise remains, but ultimately despite hawkish noises from FOMC members, the market just does not believe it and this is still likely to prevent the Fed from tightening when it needs to be bold.
We take a look at the outlook and analyse the key moves for forex markets, equities, commodities this week. Markets have been making some key moves and once more this is a key moment for traders. We look at the key economic drivers of the coming days and do a technical analysis of major markets.