Dollar dips before Fed's Powell speaks on Thursday; data boosts euro
By Karen Brettell
NEW YORK, Aug 25 (Reuters) - The dollar dipped on Tuesday as investors waited on comments from Federal Reserve Chairman Jerome Powell on Thursday about the U.S. central bank's policy framework review, and after data showed improving German business morale.
The major focus for the dollar this week will be whether the Fed's Powell signals that the U.S. central bank will shift its inflation target to an average. This would allow inflation to rise higher than previously before the Fed raises rates, which would be a further negative for the dollar.
“The most anticipated conversation is going to be Chairman Powell’s speech on Thursday,” said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California. "The expectation is that there might be a subtle shift in how much the Fed will be willing to tolerate higher inflation in the future."
The euro EUR= gained 0.41% on the day to $1.1835, after reaching $1.1965 on Monday, the highest since May 2018.
The dollar index measuring the greenback against a basket of currencies =USD fell 0.29% to 93.01.
The euro gained earlier on Tuesday after a German business climate index rose more than expected in August as both manufacturing and services picked up steam, boosting hopes that Europe's largest economy is set for a strong recovery following the massive coronavirus pandemic shock.
It is "another data point that helps keep the euro at this stretched level," said Kit Juckes, macro strategist at Societe Generale.
Rock-bottom interest rates and concerns about a more dovish inflation policy have reduced the relative appeal of the U.S. currency, while a relatively high level of COVID-19 infections is also casting doubts on the speed of the U.S. economic recovery compared with other regions, including Europe.
Data on Tuesday showed that U.S. consumer confidence dropped to a more than six-year low in August as households worried about the labor market and incomes, casting doubts on the sustainability of the economy's recovery from the COVID-19 recession.
The dollar also weakened against riskier currencies, but gained against the safe-haven Japanese yen after the United States and China said they are still committed to their Phase One trade deal.
The Australian dollar AUD= rose 0.49% to $0.7196.
The greenback rose 0.36% against the yen JPY= to 106.35 yen.
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Currency bid prices at 3:30PM (1930 GMT)
Description
RIC
Last
U.S. Close Previous Session
Pct Change
YTD Pct Change
High Bid
Low Bid
Euro/Dollar
EUR=
$1.1835
$1.1787
+0.41%
+5.58%
+1.1844
+1.1784
Dollar/Yen
JPY=
106.3500
105.9700
+0.36%
-2.31%
+106.5700
+105.8800
Euro/Yen
EURJPY=
125.90
124.94
+0.77%
+3.24%
+126.0300
+124.9500
Dollar/Swiss
CHF=
0.9074
0.9117
-0.47%
-6.24%
+0.9126
+0.9075
Sterling/Dollar
GBP=
1.3145
1.3063
+0.63%
-0.86%
+1.3169
+1.3056
Dollar/Canadian
CAD=
1.3182
1.3216
-0.26%
+1.51%
+1.3239
+1.3177
Australian/Dollar
AUD=
0.7196
0.7161
+0.49%
+2.49%
+0.7197
+0.7152
Euro/Swiss
EURCHF=
1.0742
1.0749
-0.07%
-1.01%
+1.0768
+1.0732
Euro/Sterling
EURGBP=
0.9001
0.9021
-0.22%
+6.48%
+0.9037
+0.8984
NZ Dollar/Dollar
NZD=
0.6549
0.6525
+0.37%
-2.78%
+0.6558
+0.6516
Dollar/Norway
NOK=
8.9508
9.0021
-0.57%
+1.96%
+9.0123
+8.9277
Euro/Norway
EURNOK=
10.5959
10.6160
-0.19%
+7.70%
+10.6250
+10.5580
Dollar/Sweden
SEK=
8.7512
8.7877
-0.03%
-6.38%
+8.7958
+8.7333
Euro/Sweden
EURSEK=
10.3584
10.3612
-0.03%
-1.06%
+10.3835
+10.3300
dollar aug 25https://tmsnrt.rs/3lfXwfQ
(Reporting by Karen Brettell; Additional reporting by Olga Cortaga in London; Editing by Will Dunham and Dan Grebler)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
