Dollar drifts ahead of key Fed speech as economic worries grow

The dollar held steady against most currencies on Wednesday as traders braced for U.S. data expected to show a slowdown in durable goods orders and a key speech by Federal Reserve Chairman Jerome Powell. The yuan rose toward a seven-month high after U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal, which eased concerns about a diplomatic standoff between the world’s two-largest economies.

The greenback took a hit after data on Tuesday showed U.S. consumer confidence tumbled to the lowest in more than six years due to concerns about coronavirus-induced job losses. Traders will look to Powell’s speech on Thursday at the annual Jackson Hole retreat to determine what steps the Fed is willing to take to safeguard a fragile economic recovery.

Against the euro, the dollar stood at $1.1816 on Wednesday following a 0.4% decline in the previous session. The British pound bought $1.3138 having risen 0.7% against the dollar on Tuesday. Sterling has managed to shrug off a lack of progress in trade negotiations between Britain and the European Union.

The dollar bought 0.9090 Swiss franc, close to the lowest in more than five years against the safe harbour currency. The dollar was locked into a narrow range against the yen, last trading at 106.43.

Powell’s speech at Jackson Hole – held online due to the coronavirus outbreak – is by far the biggest event of the week, but the data calendar leading up to Thursday has been discouraging.

The onshore yuan rose to 6.9002 per dollar, approaching a seven-month high after Washington and Beijing affirmed their trade deal. The Australian dollar was little changed at $0.7195 as traders monitor a coronavirus outbreak in the state of Victoria.

Dollar drifts ahead of key Fed speech as economic worries grow, Reuters, Aug 26