* Graphics: World exchange rates in 2020 https://tmsnrt.rs/2RBWI5E
Dealers expect informal tone from the Fed’s Powell
* US orders for durable goods seen slower in July
* Yuan rises seven months high with trade easing
By Julien Ponthus
LONDON, Aug. 26 (Reuters) – 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.
“Targeting average inflation over time instead of setting a fixed target of 2% would likely mean lower rates over time,” said Raffi Boyadjian, senior investment analyst at online broker XM.
“If the Fed confirms such a move, the greenback would therefore have a small chance of a meaningful rebound anytime soon,” he added, calling the mood in the foreign exchange markets “somewhat subdued” due to the uncertainty.
Both a policy change announcement or a lack of it is expected to resonate strongly across trading floors.
“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 0.1% at 93.11 after taking a hit on Tuesday after data showing US consumer confidence 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 $ 6.8908 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 $ 1.3135 dollars, up 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 $ 106.23. (Reporting by Julien Ponthus; Editing by Toby Chopra)