NEW YORK (Reuters) – The dollar fell lower on Wednesday, but remained within a relatively tight range one day ahead of a highly anticipated speech by Federal Reserve Chairman Jerome Powell.
Rolled euro banknotes are placed on US dollar banknotes in this illustration taken on 26 May 2020. REUTERS / Dado Ruvic / Illustration
Powell is scheduled to address the US Federal Reserve’s review of policy frameworks, and investors are focused on whether he would suggest shifting the Fed’s inflation target to an average.
“Targeting average inflation over time instead of setting a fixed target of 2% would probably 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 have only a small chance of a meaningful rebound anytime soon.”
The Fed is still believed to complete the details of its review with an expected announcement at the September meeting.
It risks leaving investors disappointed on Thursday if Powell does not state the change is likely.
“The risk is that the market is disappointed with what Powell has to say, and if that is the case, you can look relax in dollar shorts,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
The dollar index, which tracks the value of greenbacks against a basket of currencies = USD, fell 0.05% to 92.95.
The index previously hit a session high of 93.37 after data showed U.S. orders for durable goods rose more than expected in July.
Euro EUR = dipped 0.11% against greenback to $ 1.1820.
Yuan CNH = rose to a seven-month high of $ 6,879 after US and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal, easing concerns about diplomatic resistance between the world’s two largest economies.
Reporting by Karen Brettell; further reporting from Julien Ponthus in London; editing by Jonathan Oatis and Alistair Bell