DOLLAR IS STEADY AS POWELL'S SPEECH APPROACHES

DOLLAR IS STEADY AS POWELL’S SPEECH APPROACHES

DOLLAR IS STEADY AS POWELL’S SPEECH APPROACHES

The dollar, which was held for recent profits against the Euro and Sterling on Friday above the speech of the Chairman of the Federal Reserve Jerome Powell, expected by traders will offer clues on the planned tightening of the U.S. Central Bank tightening.

Euro almost did not change in Asian trade at $ 0.9971, after failing in several efforts this week to violate parity against the dollar. It dropped below the important psychological level on Monday.

Sterling fell 0.14% to $ 1,1821, not far from the lowest level of more than two years 1,1718 hit at the beginning of the week.

A possible driver of the currency will be the announcement of the British energy regulator later in the day of a leap rolling up in a ceiling on energy prices, further increasing inflation in a British economy already in difficulty. Fuel price increases are passed on to British consumers through a price cap, calculated every three months.

The dollar index, which follows the currency against six large peers, was 108.5, on the path to a weekly gain of 0.38% and already increased by 2.5% in August.

Investors will occupy Powell’s speech at the Jackson Hole Symposium at 1400 GMT for an overview of how the Fed still plans to aggressively increase interest rates.

Political decision-makers have highlighted in recent weeks how important it is for the Fed to control inflation.

The president of Minneapolis Federal Reserve Bank, Neel Kashkari, said on Tuesday that his greatest fear is that the American central bank has misunderstood the extent and persistence of price pressure and will have to offer even more aggressive rate increases to break inflation.

“The smoke signals (of the Federal Reserve) have been, as Kashkari said:” If we have to err on the side of validity or not doing enough, we know on which side we want to be, “said Ray Attrill, head of strategy FX at the National Australia Bank.

“I think there is one element of wanting to be seen hard in the hope that the more difficult they speak, the less we have to do in terms of the policy.”

Investors will also turn to Powell to see if its comments on long-term perspectives could encourage markets to relax monetary easing in 2023, underlying the dollar, added Attrill.

The current market is positioned for an increase in US interest rates to peak this year or exactly in early 2023 and gives prices in the decline of the year-end interest rates on the expectations of policymakers will be more concerned about slowing growth than high inflation at that time.

DOLLAR IS STEADY AS POWELL’S SPEECH APPROACHES