Traders forecast a dovish tone from Federal Reserve’s Powell. United States durable goods orders were seen to be slowing in July. Due to a trade deal relief, the yuan rises toward a seven-month high.
Investors refrained from taking risky bets. This was a day ahead of a key speech by Federal Reserve Chairman Jerome Powell. Thus, on Wednesday, the euro and the United States dollar traded cautiously.
During growing speculation, Powell could unveil a softer policy stance towards inflation at the annual Jackson Hole retreat on Thursday. Thus, investors brace for possible new steps from the Federal Reserve to prop up the United States economy.
Stephen Innes works at AxiCorp. He is chief global markets strategist there. He wrote, in a morning note, that either the United States dollar rips higher for a few weeks or the Chairman drops something juicy for ‘reflationistans’ (aka the United States dollar bears).
He further added that he would never bet against the Federal Reserve sounding dovish amid an easing cycle.
The dollar index tracks the greenback’s value against a basket of currencies. The index was up by 0.16% to 93.11. This was after taking a hit on Tuesday following some data showing the United States consumer confidence tumbling to its lowest in more than six years.
On Wednesday, data will most probably show that the growth in United States durable goods orders slowed in July. Thus, it will highlight policymakers’ concerns about the economy.
Ipek Ozkardeskaya works at Swissquote Bank. She is a senior analyst there. She told her clients that a softer-than-forecasted figure should revive the Federal Reserve doves. Meanwhile, a better-than-forecasted read would improve the mood of investors. Nevertheless, it should not have a material impact on dovish Federal Reserve expectations. This is because it is clear to everyone that the economy needs sustained support for posting positive results.
The dollar stood against the euro at $1.1818.