This week is quieter on the data front with Tuesday’s flash estimates of manufacturing and services PMIs across Europe and the US being the main focus. These surveys should shed some light on the speed of the slowdown in global economic activity and developments in terms of price and supply chain pressures. Lower gas prices are expected to support service sector demand in the US. But more declines are seen in Europe as the energy crisis takes its toll.

The key event will be the US Federal Reserve’s annual jamboree in Wyoming where global central bankers gather to discuss “Reassessing Constraints on the Economy and Policy”. The three-day symposium sees Fed Chair Powell deliver his keynote speech on Friday at 15:00 BST. The confab has historically been used as a platform for Fed officials to signal policy changes. Investors want to know how large future rate hikes will be, if officials see a slowdown coming, and any new detail on reducing the Fed’s $9 trillion balance sheet.

The dollar made a strong move last week ahead of this risk event. The greenback took out several important near-term levels in some of the majors. The euro dropped below 1.01, pound sterling went through 1.18 and USD/JPY pushed up above 137 to three-week highs. Is this smart positioning ahead of a hawkish Powell? Or simply summer price action taking advantage of thin liquidity? US Treasury yields advanced close to 3% which if sustained, might see more selling in gold, down towards $1700.

Major risk events of the week

23 August 2022, Tuesday:

–Eurozone PMIs: The market median estimate is for a decline in manufacturing to 49.3 from 49.8. That was the weakest reading since the pandemic lows. Services is forecast to fall to 50.5 from 51.2. The composite dropped into contractionary territory in July at 49.9, a 17-month low. Surging inflation, the cost-of-living crisis and supply chain issues continue to weigh. Parity in EUR/USD is previous solid support.

24 August 2022, Wednesday:

-US Durable Goods: Analysts estimate a headline print of 0.6% after the 2% rise in June. Part of the increase in the previous report was attributed to higher prices. But the absence of a sustained decline in orders suggests businesses are still investing despite tighter financial market conditions and a fall in sentiment.

25 August 2022, Thursday:

–German IFO Business Survey: Consensus forecasts a headline print of 86.6 from July’s 88.6. Last month’s print was the lowest in more than two years. Higher energy prices and drought are expected to impact confidence, while the conflict in Ukraine drags on.

26 August 2022, Friday:

–US Core PCE: The estimate is 0.1% in July, down from 1.0% in the prior month. Through June, the index advanced 6.8%, the largest increase since January 1982. Economists say the key question is whether the more muted increase in CPI is seen in the Fed’s favoured inflation gauge.