By Alun John
HONGKONG – The dollar held onto its recent gains against the euro and sterling on Friday ahead of Federal Reserve Chairman Jerome Powell’s much-anticipated speech, which traders hope will offer clues about plans to tighten the US central bank.
The euro barely changed in Asian trade at $0.9971, failing several times this week to climb back above parity against the dollar. It fell below that psychologically important level on Monday.
The pound fell 0.14% to $1.1821, not far from its lowest level in more than two years at 1.1718 hit earlier this week.
A possible driver for the currency will be the UK energy regulator’s announcement later today of a stunning jump in the energy price cap, further raising inflation in an already struggling UK economy. Fuel price increases are passed on to UK consumers through a price cap, calculated every three months.
The dollar index, which tracks the currency against six major peers, was at 108.5, on track for a weekly gain of 0.38% and already up 2.5% in August.
Investors will watch Powell’s speech at the Jackson Hole symposium at 2:00 p.m. GMT to get a glimpse of how aggressively the Fed is still planning to raise interest rates.
Policymakers have stressed in recent weeks how important it is for the Fed to get inflation under control.
Minneapolis Federal Reserve Chairman Neel Kashkari said on Tuesday his biggest fear was that the U.S. central bank would misunderstand the depth and persistence of price pressures and have to make even bigger rate hikes. aggressive measures to curb inflation.
“The smoke signals (from the Fed) have been, as Kashkari put it, ‘if we’re going to be over-tightening or not doing enough, we know which side we want to be on,'” Ray said. Attrill, Head of Currency Strategy at National Australia Bank.
“I think there’s an element of wanting to be seen as talking tough in the hope that the tougher they talk, the less we have to do in terms of politics.”
Investors will also look to Powell to see if his comments on the long-term outlook could prompt markets to unwind 2023 monetary easing bets, supporting the dollar, Attrill added.
Markets are currently positioned https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html for US rate hikes to peak this year or early 2023 and forecast rate cuts later. year on expectation, policymakers will be more concerned about slowing growth than high inflation by then.
Elsewhere, the Australian dollar fell 0.27%, back below the psychological level of $0.7, but the Aussie fared better against the battered European currencies.
The Japanese yen weakened to 136.81 to the dollar.
Currency Bid Rate at 0453 GMT
The description RIC Last modification of the closing percentage in the United States YTD Pct Bid high Bid low
Euro/Dollar $0.9965 $0.9972 -0.07% -12.34% +0.9978 +0.9962
Dollar/Yen 136.8000 136.5450 +0.13% +18.87% +136.8100 +136.4250
Euro/Yen 136.33 136.14 +0.14% +4.61% +136.3600 +136.1000
Dollar/Swiss 0.9641 0.9637 +0.05% +5.70% +0.9646 +0.9638
Pound sterling/dollar 1.1813 1.1838 -0.17% -12.61% +1.1836 +1.1807
Dollar/Canadian 1.2952 1.2924 +0.21% +2.43% +1.2956 +1.2922
Aussie/Dollar 0.6959 0.6981 -0.30% -4.25% +0.6982 +0.6954
New Zealand 0.6199 0.6226 -0.42% -9.42% +0.6225 +0.6197
Spots of Europe
Tokyo Forex Market Information from BOJ