*Eyes on Jackson Hole summit starting Thursday. NEW YORK, Aug 20- The U.S. dollar hit fresh multi-month highs against a basket of major currencies on Wednesday after minutes from the Federal Reserve's July policy meeting signaled the potential for an earlier-than-expected hike in interest rates.» Read More
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"We did see gold hit all time highs this week and the sell off wasn¿t as sharp as the sell off that we saw in silver back in April and that¿s because there have been a number of structural changes that have taken place in the gold market. We have seen gold being embraced by the portfolio manager but also there have been a number of changes that have meant the gold price is much better supported than silver is. The macro uncertainty has seen investors turning back to gold and that was something that was absent in the first part of the year." Suki Cooper commodities analyst at Barclays Capital told CNBC
Bernanke is unlikely to announce a third round of quantitative easing in his Jackson Hole speech this afternoon, Tony Fratto, the director of Hamilton Place Strategies, a public policy research firm, told CNBC. "If investors are betting on a Bernanke put, they are setting themselves up for a disappointment. Bernanke hinted at QE3 last year, but I don't think we are going to see that kind of activity today," Fratto said.
"True European fiscal union is something we will probably not see for another ten or twenty years," Alan Capper, head of credit strategy at Lloyds Banking Group told CNBC. He added that some countries within Europe were dealing with "generation long" economic problems and that some members of the Euro zone would have to get used to a long period of low or no growth and markets should price for the risk accordingly.
The seemingly inexorable rise in the price of gold, with record highs scaled on an almost weekly basis, has led some analysts to talk of a bubble forming.
"As far as I can see, this deal is specifically aimed at providing support for companies that have suffered through the strength of the yen. That seems a far more sensible thing to do then actually try and take on the strength of the yen itself," Simon Derrick, chief currency strategist at BNY Mellon, told CNBC.
On July 21, EU leaders agreed to a second bailout for Greece, one that was supposed to draw a line under the euro zone debt crisis and give the new government in Athens a chance come to grips with the huge debts it inherited when it was elected. One month later, and the situation appears to be getting worse rather than better, according to Simon Derrick, the head of currency research at Bank of New York Mellon.
"I think the German PMI announcement will have an impact on spread widening, because investors will see it as an indication that the world is slowing, Germany is slowing, and in general, risk is increasing," Adrian Schmidt, FX strategist at Lloyds Bank Corporate Markets, told CNBC.
"For the Swiss franc to look like an attractive funding currency again when it is in competition with so many other currencies at the moment we would need to see....direct intervention on the part of the Swiss National Bank," Adam Cole, head of currency strategy, RBC. He added that he did not expect much in the way of dovish comments from Fed chairman Ben Bernanke when he speaks on Friday.
Reading Fedspeak has never been easy, but these tips might help you weigh the odds of another round of pain for the dollar - er, quantitative easing.
Francisco Solar, Senior Dealer at Easy Forex, Asia Pacific says QE3 would boost investor sentiment.
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It takes a strong stomach to navigate the currency markets this week. If you can handle the stress, here's a trade for you.