Forex – Dollar Weakens as Market Awaits Fed’s Jackson Hole Symposium

© Reuters.  © Reuters.

By Peter Nurse – The dollar weakened slightly in early European trade Monday, weighed down a touch by U.S. authorization of a new coronavirus treatment, but losses have been minimal as traders look for guidance to future U.S. monetary policy from the Federal Reserve’s annual Jackson Hole retreat later in the week.

At 2:55 AM ET (0655 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 93.135. was largely flat at 105.81 and was up 0.2% at 1.3107.

The U.S. Food and Drugs Administrations on Sunday said that it had issued ‘emergency use approval’ for the use of blood plasma from recovered patients as a treatment option for certain patients suffering from the effects of the Covid-19 virus. The announcement comes at the start of a week that will see President Donald Trump formally receive the Republican Party’s nomination for re-election at its national convention.

This has helped the ‘risk-on’ tone, to the detriment of the greenback, but losses have been minor as many investors are waiting for more definitive news of a credible vaccine.

Additionally, the main focus this week is likely to be on the Federal Reserve, and Governor Jerome Powell’s opening at the Jackson Hole conference, even if it’s a virtual event.

Investors are expecting to hear news about the central bank’s long-awaited review of its monetary policy framework. 

“Once again, the market will be on the look-out for any indications that the Fed is close to adopting Average Inflation Targeting and to better understand the conditions that would prompt Yield Curve Control,” said analysts at ING, in a research note. 

The quantitative easing that the Fed has deployed so far has flooded financial markets with excess liquidity and weighed on the dollar. Last week the fell to the lowest level in more than two years.

Elsewhere, edged higher Monday, gaining 0.1% to 1.1802, but the single currency has pulled back slightly from a two-year high versus the dollar reached last week following disappointing manufacturing and services sector data for Europe released on Friday, against a backdrop of rising numbers of Covid-19 cases.

“With Covid cases resurgent in many parts of the world, the fear is now that we’ve seen the best of the recovery figures and that V-shape expectations will take a knock in September,” added ING. 

The common currency’s next major hurdle is the release of the closely-watched German sentiment survey on Tuesday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let’s block ads! (Why?)

Forex News

Leave a Reply

Your email address will not be published. Required fields are marked *