The US dollar is paring some of yesterday’s gains in quiet turnover ahead of Fed Chief Powell’s speech at Jackson Hole, the week’s last highlight. The euro and sterling are trading inside yesterday’s ranges, which the dollar has extended its gains against the yen to reach a two-week high near JPY111.50. News of a new Prime Minister in Australia has lifted some of the political uncertainty down under, and the Australian dollar has recouped about a third of yesterday’s sharp drop, its largest drop in two years (~-1.4%).

The economic calendar is light today, featuring only the Japanese CPI and US durable goods orders. Japan’s July CPI was unspectacular. The headline pace rose to 0.9% rather than 1.0% as the median forecast had it. It was at 0.7% in May and June. The July read is the highest since 1.1% in March. Most of the increase is energy. Without fresh food, what Japan calls its core rate was steady at 0.8%, but if fresh food and energy are excluded, consumer prices rose 0.3% year-over-year, almost indistinguishable from the 0.2% pace seen in June.

A sharp drop in Boeing orders (from a heady 233 orders in June to 30 in July will contribute to soft optics for the US preliminary durable goods orders report, Excluding the volatile sector, the details of the report are expected to be better. That said, ex-transportation equipment and defense orders, durable goods orders rose an average of 0.4 a month in H1 after an average increase of 0.9% in 2017. The tax cuts and other investment inducement do not appear to b having a material impact on capital expenditures. Also, much of the investment that has taken place seems to be concentrated in the energy sector.

The Bloomberg US economic data surprise index put in a multi-year peak at the end of last year and has been trending lower. It stands near 10-month lows. It is a misuse of the tool to extrapolate the Fed will slow its gradual tightening. Surprise indices say little about the economy itself and much more about economists. According to the index, economists consistently were looking for stronger than expected economic data even as the economy accelerated to a 4.1% pace in Q2, the fastest in four years.