The dollar and euro traded cautiously on Wednesday as investors refrained from taking risky bets a day ahead of a keynote speech by Federal Reserve Chairman Jerome Powell.
Amid growing speculation Powell could reveal a softer political stance on inflation at the annual retreat at Jackson Hole on Thursday, investors support the Fed’s possible new steps to support the US economy. “Either the president is lowering something juicy for ‘reflationistas’ (also known as USD bears), or the USD is ripping higher for a few weeks,” Stephen Innes, world market strategist at AxiCorp, wrote in a morning note.
“I would never bet the Fed sounds stupid during a easing cycle,” he added. The dollar index, which tracks the value of greenbacks against a basket of currencies, rose 0.16% to 93.11 after taking a hit on Tuesday after data showing consumer confidence in the US fell to its lowest in more than six years .
Data later on Wednesday are expected to show growth in U.S. commodity orders, which slowed in July, highlighting decision-makers’ concerns about the economy. “A softer-than-expected figure should revive the Fed pigeons, while a better-than-expected reading would improve investor sentiment, but should not have a significant impact on dead Fed expectations, as it is clear to everyone that the economy needs sustained support to publish good results, ”Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, told his clients.
Against the euro, the dollar stood at $ 1.1818 after falling 0.4% in the previous session. The yuan rose to a seven-month high of $ 6,8969 after US and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal, easing concerns about diplomatic opposition between the world’s two largest economies.
The British pound bought $ 1.3141 after rising 0.7% against the dollar on Tuesday. Sterling has managed to stem a lack of progress in trade negotiations between Britain and the European Union.
The dollar was locked in a narrow range against the yen, last trading at $ 106.32. The Australian dollar changed slightly at $ 0.7198 as traders monitored a coronavirus outbreak in the state of Victoria.