The euro struggled to make headway against a resilient dollar on Wednesday as attention shifts to Fed. Forex markets remained mostly calm ahead of a crucial meeting of central bankers later this week.
The outlook for euro/dollar will depend largely on whether or not policymakers live up to those expectations. Officials from major central banks will gather at Jackson Hole, Wyoming, on Friday.
Markets focus on a scheduled speech by U.S. Federal Reserve Chair Jerome Powell. The speech comes after last week’s inversion of the U.S. yield curve – widely regarded as a recession signal. This boosted expectations the Fed would cut interest rates again at its September policy meeting.
Besides, President Trump said his administration was considering potential tax cuts on wages as well as profits from asset sales. On the trade front, the U.S. President said he had to confront China even if it caused short-term harm to the U.S. economy.
The euro weakened marginally to $1.1097. The single currency has moved little since Italy’s Prime Minister resigned on Tuesday. some investors believed the move made a snap general election less likely.
START TRADINGForex – Attention shifts to Fed – Euro struggles
The dollar edged higher to 98.228. It reached its 2019 high of 98.932 at the beginning of the month. The dollar has also been supported by talk of more spending.
The dollar rose against the yen, rising 0.2% to 106.48 and further away from the 7-month high of 105.05 the Japanese currency hit last week.
The sterling was the big focus as British Prime Minister Boris Johnson heads to Berlin to meet Chancellor Angela Merkel for talks over Brexit. Sterling was last down 0.4% at $1.2126 retreating from the 12-day high of $1.2180 reached on Tuesday. But, it has risen by 0.8% since mid-August.
The British currency was 0.4% lower versus the euro at 91.52 pence.
Gold eased on Wednesday to hold around the $1,500 level as attention shifts to Fed. Investors cashed in some gains ahead of minutes from the U.S. Federal Reserve’s last meeting.
Among other precious metals, silver fell 0.35% to $17.06 per ounce.
In commodities, oil prices rose more than 1% on Wednesday after industry data showed a larger than expected drop in U.S. crude inventories. But gains were capped by lingering worries about a possible global recession.
Brent crude had gained 90 cents, or 1.5%, to $60.93 a barrel by 1225 GMT. WTI was up 58 cents, or 1.03%, at $56.71 a barrel.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money