Dollar soft as investors digest 'higher for longer' path
dollar eased from a 12-week peak on Monday as traders weighed the U.S. monetary path after the Fed Chair Jerome Powell left open the possibility of further interest rate increases, while the yen hovered close to its lowest in over nine months.
In an eagerly awaited speech at the annual Jackson Hole Economic Policy Symposium, Federal Reserve Chair Powell promised to move with care at upcoming meetings as he noted both progress made on easing price pressures as well as risks from the surprising strength of the U.S.
economy.
«We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data,» Powell said in a keynote address.
«It is the Fed's job to bring inflation down to our 2% goal, and we will do so.»
The dollar index, which measures the U.S. currency against six rivals, eased 0.115% to 104.05, but not far from the 12 week high of 104.44 it touched on Friday.
The index is up over 2% in August and set to snap a two month losing streak.
Markets anticipate an 80% chance of the Fed standing pat next month, the CME FedWatch tool showed, but the probability of a 25 basis point hike in November is now at 48% versus 33% a week earlier.
«It remains unlikely we get a hike from the Fed in September, said Chris Weston, head of research at Pepperstone. „But November is shaping up to be a 'live' event, where data points have the potential to throw interest rate expectations around.“
»When many other G10 central banks are already priced for an extended pause, the Fed potentially going again in November is supporting the dollar," Weston said.
A series of strong U.S.
