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Views Article – Sharenet Wealth

Europe, Forex

Dollar slips as Jackson Hole meeting gets underway; focus on Powell’s speech

* Markets expect Fed’s Powell to clarify Fed minutes * Euro PMIs better than expected * Chinese yuan hits 11-year low vs dollar, fans trade worries * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (New throughout, updates prices, market activity, FX table and comments; new byline, changes dateline, previous LONDON) By Gertrude Chavez-Dreyfuss NEW YORK, Aug 22 (Reuters) – The dollar weakened on Thursday as investors braced for a possible announcement or statement from the Federal Reserve at this week’s Jackson Hole, Wyoming event that would help address the worsening global economic outlook. Market participants expect the Fed announcement could be a stimulus measure, or an affirmation that the U.S. central bank is on a steady path to ease interest rates, a scenario viewed as negative for the dollar. Fed Chairman Jerome Powell will speak on Friday and expectations are building that he will clarify Fed minutes released on Wednesday and deliver a dovish speech that would soothe market worries about the prospect of recession. The Fed’s latest minutes confirmed a growing view that U.S. policymakers are reluctant to begin a big rate-cutting cycle in the coming months, describing the July easing as a mid-cycle adjustment. The minutes showed policymakers were divided over whether to cut interest rates but united in wanting to signal they were set on more cuts. “Jackson Hole is going to provide an opportunity for the Fed to correct that communication mistake in the minutes,” said Edward Moya, senior market analyst at OANDA in New York. “With the rest of the world going negative in interest rates, the risk is for that scenario to happen in the U.S. and if we don’t see the Fed become a little more aggressive through no fault of the U.S. economy, but more because of the rest of the world, they could see more pressure to deliver rate cuts,” he added. In morning trading, the dollar slipped 0.1% against a basket of major currencies to 98.218. The greenback also fell against the yen as well, down 0.2% at 106.37 yen, not far from last week’s eight-month low around 105.05. The euro, meanwhile, edged higher against the dollar, up 0.1% at $1.1097, amid an uptick in euro zone business growth. Euro zone business growth picked up in August, as services expanded and manufacturing contracted at a slower pace. But trade war fears knocked future expectations to their weakest in over six years, a survey showed. “Though the eurozone PMI data was slightly better than expected, it is fairly gloomy stuff and there is some degree of concern among investors about the Chinese yuan’s decline,” said Neil Mellor, a senior FX strategist at BNY Mellon in London. Investors also sold Asian currencies after the Chinese yuan fell to an 11-year low against the dollar, indicating trade tension between the world’s two biggest economies remained a major issue. In onshore trading, the yuan fell to 7.0752 per dollar, its weakest since March 2008, before recovering to 7.0732. In offshore trade, the dollar rose 0.29% to 7.0872 yuan. ======================================================== Currency bid prices at 10:02 AM (1402 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1090 $1.1083 +0.06% -3.30% +1.1112 +1.1064 Dollar/Yen JPY= 106.3600 106.6100 -0.23% -3.54% +106.6400 +106.2600 Euro/Yen EURJPY= 117.98 118.16 -0.15% -6.53% +118.2900 +117.7400 Dollar/Swiss CHF= 0.9830 0.9823 +0.07% +0.14% +0.9844 +0.9815 Sterling/Dollar GBP= 1.2251 1.2126 +1.03% -3.97% +1.2265 +1.2109 Dollar/Canadian CAD= 1.3281 1.3289 -0.06% -2.61% +1.3315 +1.3275 Australian/Doll AUD= 0.6769 0.6780 -0.16% -3.97% +0.6787 +0.6759 ar Euro/Swiss EURCHF= 1.0902 1.0888 +0.13% -3.13% +1.0919 +1.0876 Euro/Sterling EURGBP= 0.9053 0.9138 -0.93% +0.77% +0.9157 +0.9043 NZ NZD= 0.6383 0.6402 -0.30% -4.97% +0.6407 +0.6372 Dollar/Dollar Dollar/Norway NOK= 8.9630 8.9442 +0.21% +3.75% +8.9826 +8.9372 Euro/Norway EURNOK= 9.9428 9.9123 +0.31% +0.36% +9.9550 +9.9145 Dollar/Sweden SEK= 9.6614 9.6230 +0.45% +7.78% +9.6838 +9.5967 Euro/Sweden EURSEK= 10.7177 10.6695 +0.45% +4.42% +10.7323 +10.6568 (Reporting by Gertrude Chavez-Dreyfuss: Additional reporting by Saikat Chatterjee in London; Editing by David Gregorio)


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