- Federal Reserve’s annual Jackson Hole summit this week.
- The US-China tension is worrying markets.
The dollar is steady against its competitors on Monday as investors wait for more data on the global economic health and look towards the Jackson Hole retreat to gain insights regarding Fed policy.
The dollar selling has receded after sentiments improved on the release of business activity data and home sales. Still, additional monetary measures to keep economic growth on track are not ruled out by the market.
Yuan and other financial market traders are keenly tracking Sino-US ties as tensions haven’t shown any glimpse of receding.
Analysts expect a short-term bounce in the dollar, but think that the dollar selling might resume as the Fed has to continue to be ultra dovish for some time.
Euro was trading at 1.1803 dollars, keeping the last week gains.
The pound was at 1.3095 dollars and 90.14 pence for a euro.
The greenback was at 0.9121 Swiss francs, having made 0.5 Percent gain on Friday.
Japanese Prime Minister Shinzo Abe’s health concerns didn’t add to the yen volatility as it traded at 105.76 yen for a dollar.
The markets will note Federal Reserve Chairman Jerome Powell’s speech on Thursday at Kansas City Fed’s annual symposium. The pandemic has ruled out the conduct of this year’s meeting at the usual venue -hunting and fishing resort of Jackson Hole, Wyoming; instead, the conference will be online.
Last week the dollar index fell to the lowest in more than two years as the flooding of excess liquidity by the Fed has impacted the dollar’s value against its competitors. The index was last trading at 93.155 and hasn’t moved after the Friday close.
Almost all countries have adopted an unprecedented wave of monetary and fiscal support to fight the pandemic induced slowdown. But, many countries witnessed another surge of the coronavirus casting doubts over the economic recovery hopes. In this backdrop, the traders want to see improved US GDP numbers in the second quarter – a second estimate would be released this week.
European manufacturing and services sector data released on Friday had put euro on the defensive. The common-currency traders are watching out for the IFO sentiment survey on Tuesday. Euro pullback from the recent two-year highs against the dollar last week could attract bears to the counter.
Dollar net shorts in the market have now receded from a nine-year high according to the data compiled by Reuters and US Commodity Futures Trading Commission, released on Friday.
The Yuan traded at 6.9175 in the on-shore market, without any change, despite the US-China tensions in the background. Trump had on the weekend suggested decoupling from the Chinese economy.
The Australian dollar was at 0.7175 dollars, firming up as the state of Victoria reported the lowest rise in the coronavirus cases for the last seven weeks, as hopes emerged that the pandemic’s second wave is subsiding.
