The dollar give ground after 12 weeks progress, while evaluating the way forward monetary policy in the United States after the declarations of the president of the Federal Reserve, Jerome Powell. Parallel, the yen nearing nine-month lows.
In a long-awaited speech at the Jackson Hole Annual Economic Policy SymposiumPowell promised to exercise caution in the upcoming meetings and highlighted both the progress in containing the inflationary pressures such as risks from the unexpected strength of the US economy.
“We will proceed cautiously in deciding whether to further tighten monetary policy or instead hold the key interest rate constant pending new data,” he said. Powell on Friday. “It is the duty of the Fed to reduce inflation to our 2% targetAnd so we will.”
He dollar index, which compares against six major currencies, is down 0.106% at 104.05, although it remains close to the 12-week high hit on Friday at 104.44. In August, the index has advanced more than 2%, on track to break two consecutive months of losses.
Dollar: the market puts on interest rates
According to CME’s FedWatch tool, markets anticipate an 80% chance that the Federal Reserve will maintain the stance next monthalthough the possibility of a 25 basis point increase in November rises to 48%, compared to 33% the previous week.
chris westonhead of analysis at Pepperstone, opined: “The Fed is unlikely to raise rates in September, but November looks like an ‘unfolding’ event, where data points have the potential to alter interest rate expectations.” interest”.
“As several other G-10 central banks already anticipate a prolonged pause, the possibility of the Federal Reserve taking action again in November supports the dollar,” Weston added.
In other currencies, the yen fell 0.03% compared to to the dollar, sitting at 146.46, slightly below Friday’s more than nine-month low of 146.64. Traders continue to watch for signs of intervention in the foreign exchange market by the Japanese authorities.
The Bank of Japan will maintain its ultra-loose monetary policy as core inflation in Japan is still “a bit below” its target, according to the central bank governor.
Meanwhile, the euro and the pound sterling recover two month minimum. The single currency is up 0.08% at $1.0809, while sterling is trading at $1.26, up 0.18% from the previous day.
The dollar The Australian dollar is up 0.42% to reach US$0.643, while the New Zealand dollar gains 0.20% against the US dollar to settle at US$0.592, following the halving of the stamp duty on trade in actions by China, increasing risk appetite.
Oceanian currencies have suffered higher losses at 4% this monthdue to concerns about the Chinese recovery after the pandemic, which has affected confidence in the markets.
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