As largely anticipated, markets have begun to recalibrate stimulus expectations ahead of this Friday’s conference in Jackson Hole with the U.S dollar the prime beneficiary. After attracting some bids in yesterdays domestic session, the Australian dollar resumed a downward trajectory overnight, crossing the downside of 103-figure to 5-week lows of 102.76 US cents. The Euro outpaced its risk counterparts but remained capped under the weight of a stronger greenback. This theme of dollar strength was apparent across its high-beta counterparts and risk currencies alike, but increased Yen demand saw the Japanese safe-haven stronger against with the USDJPY pair edging lower. U.S equities reflected the declining odds of QE3 with the DOW and S&P losing 0.81 and 0.78 percent respectively.

Markets are looking at each incoming data pulse in the context of the whether the Federal Reserve will launch a third round of quantitative easing, and although incoming data points show the U.S recovery remains tepid at best, bright spots across some leading indicators suggests the Fed may be reluctant to imminently launch QE3. Recent reports on retail sales, GDP and housing all point to a slightly stronger than anticipated recovery and there’s a sense some of the softer incoming data points could be worse. In essence, what we’re seeing is a healthy recalibration of expectations which decreases the risk of disappointment if the Dr. Bernanke fails to provide any immediate signal the Fed is on the cusp of commencing new asset purchases.

U.S economic data overnight showed personal consumption rose 1.6 percent in annual terms, falling from 1.8 percent in July. Personal income rose 0.3 percent in July to match estimates and June’s growth and spending edged up 0.4 percent from a flat reading in June. Weekly jobless claims were unchanged at 374,000 for the week ending August 25, edging slightly higher above consensus estimate of 370,000. Atlanta Fed President Dennis Lockhart also prompted a dulling of stimulus expectations overnight, stating in an interview with CNBC that additional easing is a “close call” while adding “I am not overly concerned with the longer-term costs of more action but at the same time I see limited benefit from more action.”

Nevertheless, feedback from the Fed in recent times has forced markets to price in such easing prospects. In response to questions from the Chairman of the House oversight committee, Darrell Issa, Fed Chairman Ben Bernanke once again displayed a willingness to enact further easing initiatives. In a written reply dated 22^nd August, Bernanke noted “there is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery.” Furthermore, responding to concerns on the implications of existing initiatives taken by the Federal Reserve, Bernanke defended Fed policy decisions stating they have “helped to promote a stronger recovery than otherwise would have occurred, and to forestall the possibility of a slide into deflation by putting downward pressure on longer-term interest rates and contributing to broader easing in financial conditions.” Still, the letter failed to provide specifics or if indeed further action is required, given existing programs such as operation twist has yet to fully infiltrate the economy. The letter is in tune with recent Fed commentary with last week’s release of the monetary policy minutes stating “many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.”

A series of mixed economic indicators provided little in the way of clear direction overnight ahead of the Fed’s annual Jackson Hole conference on Friday. Markets are looking at each release in the context of how this will affect the chances of further Fed stimulus and if indeed Chairman Ben Bernanke will signal such measures in his address on Friday. Nevertheless, a mild bid-tone for the U.S dollar favoured easing across the risk spectrum with the greenback getting the upper hand against its major counterparts. The Aussie dollar continue to be capped below 104 US cents with moderate weakness noted in throughout the U.S session but remained supported above key short-term support at 103.4 US cents. The Euro followed a similar path unable to break through the upside of 1.2580 before weakening over the course of U.S trade. After mild weakness on Tuesday, the U.S dollar was well bid across major counterparts with the Kiwi, Euro and Swiss franc leading a move lower.

In U.S economic news, second-quarter GDP was revised higher from 1.5 to 1.7 percent. Core consumption expenditure also matched preliminary estimates recording quarterly growth of 1.8 percent. Personal consumption increased to 1.7 percent ahead of preliminary expectations of 1.5 percent. Pending homes sales data showed the housing recovery remains intact recording a 2.4 percent growth in July to represent a rise of 15 percent in yearly terms. The release of the Fed’s beige book which is an anecdotal account of current conditions from each of the 12 Federal Reserve districts showed growth remained moderate. According to the text, economic activity continued to expand “gradually” across most regions. On balance it appears even though there may be bright spots throughout some districts, it hardly represents a material change to overall subdued conditions with some regions experience “slow growth in most sectors and declines in manufacturing.”

Earlier in European trade, preliminary estimates for German consumer prices in August showed inflation rose 2-percent in annual terms from 1.7 percent in July. Expectations were for slightly more moderate rise to 1.9 percent. In an article in the German publication Die Zeit, European Central Bank President Mario Draghi once again signalled non-standard policy initiatives are on the horizon, writing “It should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools.” Draghi also wrote “when markets are fragmented or influenced by irrational fears, our monetary policy signals do not reach citizens evenly across the euro area, “the ECB will do what is necessary to ensure price stability, it will remain independent and it will always act within the limits of its mandate.” Citing increased workload, Draghi has cancelled his scheduled appearance at the Jackson Hole conference later this week.

Once again the local session will see little in the way of major themes to promote any significant moves with private capital expenditure and building approvals on the docket at 11.30. We anticipate regional equities to direct short term price action before we’re once again at the mercy of European and U.S markets to guide the way.

In a blow for those hoping to get further insight into the European Central Bank’s next move, President Mario Draghi has cancelled his scheduled appearance at the Jackson Hole conference later this week, citing increased “workload.” It’s clear Investors are in high expectancy mode ahead of the next ECB policy decision on Sept 6, which is expected to see the Draghi and Co embark on new easing initiatives to bring down the borrowing cost of Europe’s struggling periphery.

Spanish growth statistics released overnight showed Gross Domestic Product fell 0.4 percent in second-quarter to represent a contraction of 1.3 percent in yearly terms. Alarmingly, the report from the National Institute of Statistics also reported employment in the economy decreases at a year-on-year rate of 4.6%, to represent a net reduction of 801 thousand full-time jobs in yearly terms. Nevertheless, a sale of short-term Spanish debt fetched a decidedly lower yield than recent auctions, reflecting positivity over the countries near-term prospects in light of expectations the European Central Bank will begin buying distressed peripheral debt. Spain sold €1.67 billion in 3-months debt at an average yield of 0.95 percent from 2.43 percent on July 24. It also sold €1.93 billion in 6-month debt at of 2.03 percent, down from 3.69 percent. Still, Spain must first seek financial aid and meet “strict and effective conditionality in line with the established guidelines,” to qualify for direct assistance from the European Central Bank to bring down borrowing costs

Risk currencies strengthened overnight largely responding to a heavy greenback across the board. Despite what appears to be a moderation in expectations ahead of this Friday’s Jackson Hole conference, we’ve yet to see this manifest in US dollar performance, suggesting a greater risk of disappointment in the ensuing period. After moderate losses early this week, the Euro found some upside momentum once again before stalling just shy of $US1.2580, while remaining well-bid against its high-beta counterparts. The EURAUD pair returned above 1.21-figure for the first time since early July with price action approaching technical levels considered to be overbought. The latest bout of EURAUD strength coincides with the relative strength index approaching the ‘70’ levels. Technical analysts believe a reading of ‘70’ or above suggests a reversal to the downside while a reading of ‘30’ and below shows oversold signals. The Australian dollar managed to stave off broad selling earlier this week with a weaker greenback helping the pair to bounce off technical support of 103.4 US cents to highs of 104.9 US cents.

Across the Atlantic, Economic data was mixed with the Case-Shiller house price index recording a surprise increase in June amid a lower than expected read in U.S consumer confidence. In an interview with Bloomberg, the managing director of Ratings agency Fitch, David Riley said the looming U.S fiscal cliff  is of “real concern,” while suggesting the countries triple-A debt rating is at risk of being downgraded by the first half of 2013. Meanwhile, market participants remain transfixed this week’s conference in Jackson Hole conference on Friday in the hope Fed Chairman Bernanke signals a third round of quantitative easing.

The day ahead will see regional equities guide currency performance in the absence of major market moving themes locally. Data on construction work done is due for release at 11.30 AEST.

Pessimism surrounding China’s growth prospects continued to pressure the Australian dollar with latest industrial profits sliding 5.4 percent in July from a year earlier, representing the fourth consecutive month of negative growth. The local unit continued is slow grind lower falling to fresh 1-month lows against the U.S dollar. The data pulse from China has been far from inspiring with recent economic releases suggesting China’s days of expeditious growth have taken a south-bound turn. Recent data points have shown shrinking exports amid subdued domestic demand, in addition to sub-par bank lending activity. While a moderation in export activity reflects the persistent drama’s resonating from the Euro area, sub-par imports to the region may suggest recent easing initiatives by the Peoples Bank of China have yet to infiltrate domestic demand or simply may not be enough. Recent consumer price data may have shown an inflation environment worthy of further policy easing; however it’s also clear the world’s second largest economy faces considerable challenges unrelated to domestic policy, as Eurocentric concerns continue to slow the pace of exports to the region. The latest trade data showed exports to Europe slumped 16 percent in July from a year earlier. Meanwhile on a tour of one of China’s largest exporting province’s Guangdong, Premier Wen Jiabao said “Stabilizing economic growth is the key task for second-half economic work” while stating “the third quarter is a crucial period for realizing full year targets on export growth.”This now places further pressure on government and monetary authorities to concentrate on boosting growth from a domestic perspective, in light of the unwavering anxiety from the European region in particular.

Meanwhile, markets from both sides of the Atlantic remain transfixed on the prospect of near-term central bank policy action with hopes of ECB intervention underpinning gains across European equities overnight, despite the latest German IFO business climate release falling to its lowest level since March 2010. Business conditions fell to an index level of 102.3 in August, from a previous 103.3, raising further doubts over Germany’s economic prowess amid constant negativity from the periphery.

The Euro continued to consolidate last week’s gains against the greenback with the pair falling below 1.25-figure, but on balance the Euro remains a risk currency of least resistance outpacing its commodity bloc counterparts the Kiwi, CAD and Aussie. We’re also seeing the greenback reactive to constant change in stimulus speculation with markets assessing each data point and central bank comment ahead of this week’s Jackson Hole symposium. Overnight, Chicago Federal Reserve Bank President Charles Evans took a more hasty position telling reporters in Hong Kong, “I don’t think we should be in a mode where we are waiting to see what the next few data releases bring,” We are well past the threshold for additional action; we should take that action now.”

Local economic data due for release today includes HIA new home sales at 11am AEST.

FX risk trends failed to adhere to respectable gains from U.S equities on Friday, despite hopes central banks from both sides of the Atlantic will soon unleash a new wave of policy easing measures. True to form, speculation surrounding the Fed’s near-term easing plans remained in the headlines with market participants focusing on a letter from Fed Chairman Ben Bernanke in reply to questions from the Chairman of the House oversight committee, Darrell Issa. Bernanke wrote “there is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery.”

Investors also focused on fresh reports the ECB may cap borrowing costs of Europe’s struggling periphery, with a Reuters report quoting a central bank source as saying a yield cap “is one of the options that is currently being discussed in the working groups and will then be handled by the Governing Council.” Still, many economists consider this an unlikely scenario, given the stress it would place on the European Central Bank to continually intervene in an effort to keep borrowing costs in-line with predetermined yield or spread differential targets. Although rumour and innuendo over exactly what actions the European Central Bank can/will take in their next policy meeting persist, it appears markets are increasingly taking each rumour and counter rumour with a grain of salt.

Despite a late reversal, the greenback remained under the Euro’s thumb over the course of last week with a squeezing out of Euro short positioning prompting a 1.5 percent gain from the EURUSD pair. Similarly, the dollar held a southbound trajectory against its safe-haven rivals the Swiss franc and Yen driven in part by an increase in expectations the Fed will soon embark on a fresh round of stimulus.

This week will see a similar theme guide markets with investors transfixed on Friday’s gathering of the world’s central bank elite in Jackson Hole, Wyoming, for the annual Kansas City Fed symposium. In recent years the event has attracted increased attention in light of the common challenges faced by global central banks, as a result of the financial crisis. The meeting is also seen as a platform for leaders to discuss future policy decisions, notably Fed Chairman Ben Bernanke used the event in 2010 to signal a second round of quantitative easing. Markets are clearly looking for Bernanke to elaborate on recent Fed commentary showing a willingness to embark on further easing initiatives should incoming data points fail to show a “substantial and sustainable strengthening in the pace of the economic recovery.”  Although Fed members have individually displayed their conditional tick of approval should the economy falter, it’s unlikely Bernanke can be any more succinct than his letter to the Chairman of the House oversight committee, Darrell Issa, last week, which stated “there is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery.” Nevertheless, speculative activity ahead Friday’s meeting will be high, reflecting the constant changes in expectations as market participants look to each incoming data point to gauge how this may sway the chances of imminent policy easing. Among a host of influential data points due for release, top-tier data on this week’s docket includes a revision to second-quarter GDP on Wednesday, an anecdotal view of economic conditions from the Fed’s beige book on Thursday, alongside the release of July’s personal consumption expenditure data. Data on the health of U.S housing, consumer confidence and factory orders will also be watched closely ahead of the Jackson Hole conference.

In the absence of local market moving releases, we anticipate the Australian dollar’s performance this week will be closely tied to U.S stimulus expectations ahead of Friday’s Jackson Hole symposium. Mid-tier releases this week will see the focus remain on China with the industrial profits and leading index on the docket, while local releases include HIA new home sales, private capital expenditure and private sector credit. From a local perspective, market participants are well informed given the recent host of commentary from the RBA, suggesting local directives will take a back seat to central bank expectations emanating from both sides of the Atlantic in addition to the growing possibility of new stimulus initiatives from China.

FX risk trends favoured the greenback overnight erasing some of Wednesday’s post-fed minutes losses which showed members were closer to unleashing a third round of asset purchases. The Australian dollar lead risk currencies lower against the greenback with yesterday’s underwhelming Chinese manufacturing PMI the start of a more extensive decline overnight on negative risk trends.

Nevertheless, the Euro managed to stave off this general greenback strength on reports Spain is in talks with European leaders, in what may lead to an eventual bailout request and pave the way for the ECB support in the form of bond purchases. The Euro rose to 7-week highs against the greenback just shy of $US1.26-figure, while continuing to post solid gains against the Aussie dollar with the EURAUD pair rising to 6-week highs. The Kiwi was the strongest of the commodity bloc with managed to suffer only moderate losses against the greenback, while squeezing out gains against the otherwise in-form Euro.

Markets continued to interpret a largely inconsistent set of directives, with mixed economic feedback from Europe and the United states providing little in the way of clarity. Amid general optimism European leaders will finally take decisive steps to stem the regions decline, growth concerns surrounding the economic health of flagship Germany remains of careful consideration.

Macro data released overnight showed German GDP rose a seasonally adjusted 0.3 percent in the second-quarter, matching preliminary estimates. In yearly terms the German economy grew 1-percent also unchanged from preliminary estimates. German manufacturing PMI recorded an index level of 45.1 in August from 43 in July, while services PMI fell into contraction territory falling to 48.3 from a previous 50.3. Similarly, Euro-Zone manufacturing PMI rose to 45.3 in August, outpacing estimates of 44.2, while services slipped further into contraction territory falling to 47.5.

Across the Atlantic, U.S weekly jobless claims rose by 372,000 for the week ending August 18 against expectations of 365,000. U.S manufacturing PMI rose to an index level of 51.9, slightly ahead of expectations of 51.5. U.S housing data also showed more tentative signs the housing sector is waking after a six-year slumber, with new home sales jumping 3.6 percent in July from a fall of 3.5 percent in June.

On the surface it would appear a confusing set of directives has promoted a modest bout of risk aversion, however it’s also important to consider the implications each data pulse has on quantitative easing expectations. Markets remain on high alert ahead of the Fed’s annual Jackson Hole conference, looking for any shift in underlying data trends to quantify the likelihood of further easing initiatives.

At the time of writing the Australian dollar is buying 104.4 US cents ahead of RBA Governor Glenn Stevens appearance before the House of Representatives Economics Committee. Given the recent scandal implicating top ranking RBA officials in the Securency scandal, one would expect this to take up a fair portion of the Governors 3-hour grilling, nonetheless, investors will be closely watching Stevens for his current economic assessment and attempt to decipher how this may affect near-term interest rates. Also on the local docket is the release of the conference board leading Index for June.

The U.S dollar’s trajectory took a sharp south-bound turn overnight, once again driven by U.S stimulus expectations. The release of the Fed policy meeting minutes were the primary catalyst for greenback losses showing the consensus across the committee is in favour of further  monetary accommodation “fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.”  Although members remain cautious of the implications, the minutes show support for further asset purchases has gained further traction in addition to explicate guidelines on how future economic performance may shape policy decisions.

This willingness from the FOMC still keep QE in their armory induced a recalibration of expectations, resulting in notable losses from the greenback. The most pronounced move came from the USDJPY pair which slid over 1-percent in the ensuing period while the Euro, sterling, and commodity bloc currencies also received a solid leg-up by default. The Euro broke the upside of key short-term resistance at 1.2485/90 region exacerbated by light liquidity amid existing support as short-players continued to be squeezed out of the market.

With each new data point or Fed correspondence released we’re seeing markets recalibrate stimulus expectations with immediate and decisive moves from the greenback suggesting markets have little in the way of conviction over the Fed’s next move. Its clear markets are consumed with central bank easing expectations from both sides of the Atlantic and every data pulse has investors crossing the veritable minefield in an attempt to pre-empt central banks. Before the next policy meeting in September, markets will be closely watching the Fed’s latest economic assessment at the Jackson Hole conference on August 31, with the hope Fed Chairman Ben Bernanke will use the event as a platform to signal QE3. Between now and then, market participants are on high alert looking for any under-performing top-tier data point’s to increase the chances.

The Australian dollar regained some of its sheen against the greenback, returning above 105 US cents but remained out of favour against its risk currency counterparts and significant gains from the Japanese Yen. Today’s economic data has the ability to make or break overnight gains as investors turn to the release of the HSBC China flash manufacturing PMI and leading index.

Following on from the tail end of U.S trade, the Aussie has eased lower in early Asia, coinciding with a soft opening from regional equity markets. The key inflection point set in the ensuing period of yesterdays RBA minutes appears to be all but faded, with softer U.S equity performance in the latter part of U.S trade prompting moderate losses. The local unit has maintained a downward trajectory against the Euro which continues to reap the rewards of squaring of short positioning. This short squeeze saw the Euro rise to 7-week highs of 1.2490 and remains well supported around current levels of 1.2470, while also posting solid gains against the recently in-form Canadian dollar.  Rumor and innuendo continue to drive currencies with investors focusing on possible ECB initiatives in the pipeline to bring down the borrowing costs across Europe’s periphery. A well attended Spanish debt auction gave the Euro further impetus to build on earlier gains, with the upside momentum forcing a further squeeze of short-side positioning, exacerbated by light liquidity.

The Australian dollar enjoyed solid support in the ensuing period of RBA monetary policy minutes and into early European trade with price action breaking the 105 US cent region. The release of the minutes set a key inflection point for the local unit but the momentum faded coinciding with a reversal from U.S equities which provided some headwinds. As often the case, it was perhaps what was absent from the minutes which gave the local unit a burst of energy. Apart from a brief mention, the minutes failed to elaborate on the fundamental divergence between dollar demand and a decline in commodity prices, and more importantly if this divergence is classified as market dysfunction worthy of direct intervention. Markets have been well informed (courtesy of the recent Statement on Monetary Policy) of the “important risks” a high exchange rate may have on domestic conditions which softened the impact. Nevertheless, while acknowledging the risks to the domestic economy emanating from the Euro region and deterioration in the global growth prospects, the minutes were far from gloomy. The minutes noted tentative signs Chinese growth is “stabilising at a more sustainable pace,” while recent interest rate reductions were beginning to infiltrate domestic conditions, in particular the housing market.

While regional equity movements may provide the direction in domestic trade, the next top-tier event will be this evening’s release of the FOMC meeting from the August 1^st meeting, which is sure to attract the usual level of stimulus related conjecture ahead of the Jackson Hole summit on August 31. Nevertheless, market expectations surrounding the near chances of further stimulus are largely divided, with a recent string of mixed indicators doing little to tip expectations one way or the other. It’s clear there’s a confusing set of directives to guide expectations and FOMC members have done little to clear the air. Overnight Atlanta Fed President Dennis Lockhart summed it by saying “monetary policy can exert a powerful positive influence on an economy,” it “is not a panacea.”

With very little in the way of major market moving themes to guide the way, FX risk trends were largely neutral overnight amid extremely light liquidity. Support for the Euro remained in play despite moderate losses across European equities and further criticism from Germany’s central bank over the proposed ECB bond buying operations.  There has also been talk the ECB may place limits on peripheral debt yields, which was quickly refuted by the bank. The Aussie dollar maintained a tight 35 pip range against the greenback with price action consolidating around current levels of 104.5 US cents.

Its clear markets are in a holding pattern ahead of significant forthcoming event risk with the Fed’s annual conference in Jackson Hole on August 31 and policy decision in early September. The same level of anticipation exists across the Atlantic with markets awaiting crucial feedback from the European Central Bank in relation to their proposed bond buying operations.

Wednesday’s release of the Fed minutes from the August 1st meeting is sure to attract the usual level of stimulus related conjecture ahead of the Jackson Hole, and a speech by Atlanta Fed President Dennis Lockhart and current FOMC voting member will also be closely watched this evening as markets attempt to gather intelligence on the likelihood of further stimulus. Euro-group President Jean-Claude Juncker will also meet Greek Prime Minister Antonis Samara in Athens this week, amid speculation Greece will seek more time to implement agreed austerity measures as part of their bailout conditions.

The day ahead will see the focus shift to the release of the RBA minutes from August 7 which saw the bank hold the official cash rate steady at 3.5 percent. While acknowledging the significant challenges from the euro region amid a subdued global growth outlook, on balance, the statement painted a fairly positive picture. On China, the statement noted growth has moderated to a more sustainable pace, but “does not appear to be slowing further.” Local inflation is expected to be in line with expectations and business credit has recorded its strongest growth in several years. On the Australian dollar, the bank highlighted the local unit’s resilience despite a marked decline in the terms of trade and weaker global growth outlook. This point was further emphasized in the later release of the RBA Statement on Monetary Policy which also acknowledged the role a strong currency has played in dampening domestic growth and weighing on non-resource industries and employment. In short, the board considers the high exchange rate places “important risks” on the domestic conditions. This represents a change in language from previous RBA commentary, with the emphasis now on the disparity between fundamental drivers and Aussie dollar demand. Any elaboration on this today may serve as a reminder the Reserve Bank has their eye on high exchange rate, in turn reigniting the debate on how the bank will mitigate these “important risks”.

Stimulus conjecture remained a primary directive on Friday with markets once again walking the veritable minefield of preempting the Fed’s next move. On balance, the U.S macro picture has appeared a little brighter in recent sessions, adding weight to the argument the Fed may hold fire on further stimulus measures.  Nevertheless, there remains a significant lack of consistency which was demonstrated by last week’s subdued inflation print, prompting a switch back in favor of further Fed easing. It’s clear markets are consumed with central bank easing expectations from both sides of the Atlantic and every data pulse has investors recalibrating there expectancy models.  This was also demonstrated in the ensuing period of Tuesday’s outperforming retail sales data, which induced a solid greenback rebound across the board. With the picture still clear as mud, the only certainty is more of the same ahead of the highly anticipated meeting of the central bankers’ at Jackson Hole, Wyoming on August 31.

Despite moderate support across U.S equities, the Australian dollar trajectory turned sharply south on Friday with the AUDUSD pair cross the downside of points of previous support, before bottoming out just above 104-figure.  The very same factors which have underpinned recent gains are now working against Aussie dollar as market participants discount the chances of further Fed stimulus. The local unit was the second-worst performer of the major’s, losing around 1.5 percent over the week, behind the Japanese Yen which lost 1.64 percent against the in-form greenback.  A slightly better-than-expected consumer confidence report from the University of Michigan confirmed the trend of U.S dollar dominance, while U.S equity markets finished the week in positive territory, representing six consecutive weeks of gains from the DOW and S&P500. The Euro escaped largely unscathed against the greenback with the pair finishing a moderate 0.36 percent high over the week. The euro forged a 3-week high against the Aussie dollar on Friday and 6-week highs against the Japanese Yen. Despite a latter week reversal, the Canadian dollar maintained the upper hand over the greenback which finished the week with mild gains. Overall, the CAD had a solid week, posting fresh 14-week highs against the Japanese Yen and record highs against the Euro.

Apart from the usual headline risk resonating from the Euro region, stimulus will remain a key directive this week in the U.S with Wednesday’s release of the Fed minutes from the August 1^st meeting sure to attract the usual level of stimulus related conjecture ahead of the Jackson Hole summit. A speech by Atlanta Fed President Dennis Lockhart and current FOMC voting member will also be closely watched on Tuesday as markets continue to ponder the likelihood of a new round of Fed easing initiatives. Economic news this will see the focus turn to data on the health of the U.S housing sector with new and existing home sales alongside corporate earnings from tech heavyweights Dell and HP. Manufacturing data will take the stage later in the week with Markit PMI and Durable goods orders on the docket.

Across the Atlantic, Germany will provide the bulk of euro region macro releases this week with Thursday’s final revision of second-quarter GDP to take centre stage. Also of interest will be the health of manufacturing and service sectors with both Germany and the Euro-Zone PMI releases. Euro-group President Jean-Claude Juncker will meet Greek Prime Minister Antonis Samara in Athens this week, amid speculation Greece will seek more time to implement agreed austerity measures as part of their bailout conditions.

Locally,  the release of the RBA minutes from their August 7 meeting will be the highlight of the local week ahead. Also in the frame this week will be the release of the HSBC China flash manufacturing PMI on Thursday and RBA Governor Glenn Stevens appears before the House of Representatives Standing committee on Friday.