The USD inched lower in Thursday’s trading as investors await the key annual Federal Reserve meeting at Jackson Hole in Florida.
At the end of the two-day summit, a speech by Federal Reserve Chairman Jerome Powell on Friday will be keenly watched for clues on possible interest rate hikes this year and beyond.
With many investors adopting a wait-and-see attitude in both the European trading session and the early part of the North American trading session, the US Dollar index fell 0.19% at the time of writing.
In the forex markets, the greenback was down in most major pairs. Against the British Pound, the US Dollar was down nearly a quarter of a percent. In the EUR/USD pairing the USD edged 0.07% higher as the Euro found itself also under pressure on Thursday.
Against the commodity-linked Australian Dollar, the US Dollar was down a whopping 0.88% as Gold, Silver, and Copper all enjoyed a run in the commodity markets. Meanwhile, against its Canadian dollar cousin, the US Dollar was down 0.20%. The USD didn’t fare any better against the Japanese Yen on Thursday with the USD/JPY pairing down 0.32% at the time of writing.
Third Consecutive Rate Hike Ahead?
With the US awaiting an indication on whether or not there will be a third consecutive rate hike of 75 points ahead, an FXPro analyst said:
“Fed officials have spent the last couple of weeks actively managing expectations, indicating that the central bank has a more hawkish approach to policy, denying the problems in the economy that investors so fear,”
“Traders in the markets are speculating whether this means the risk of a third consecutive rate hike of 75 points in September.”
“In this scenario, the dollar index is moving towards 120 (+10.5% to the current price), which is at its 2001-2002 highs. It is likely that on the approach to these levels, even the hawkish Fed and Treasury are concerned about a strong dollar.”
