Markets’ eyes are on Powell speech in which he is expected to take a dovish FED stance on inflation to support a fragile economy.
The Federal Reserve Chair is likely to make a case for low interest rates and higher inflation in his remarks.
The Fed has cut interest rates to near zero and introduced unparalleled measures to stimulate the coronavirus-hit economy. The U.S. Central Bank has started bond-buying and approved a massive lending programme.
Its balance sheet has expanded by as much as $3 trillion since the start of the pandemic. This is far more than that of the European Central Bank and Bank of Japan.
According to the schedule, Powell will address the Fed’s annual central bankers’ conference at 1330 GMT. The symposium usually takes place in Jackson Hole but this year it will go virtually because of the COVID-19 pandemic.
Before his address, investors will get a look at the weekly jobless claims report. The timeliest U.S. economic indicator will probably have dipped to 1 million for the week ended Aug. 22.
Recent data suggests a wobbly recovery from one of the worst recessions for the U.S. economy since the Great Depression.
Also, in focus is the Republican National Convention. U.S. President Donald Trump will speak live from the White House on Thursday.
The market appeared to ignore the latest sign of rising tension between the United States and China. The United States blacklisted 24 Chinese companies and targeted individuals over construction and military activity in the South China Sea.
START TRADINGForex – Dovish FED stance on inflation expected
Investors are watching for inflation and monetary policy clues and a dovish FED stance is expected. Jerome Powell will probably signal tolerance for higher inflation.
The dollar’s index against six major currencies rose 0.2% at 93.04. The index is still near its weakest this week and not far off the two-year low of 92.12 it touched last week.
The dollar was steady against the Japanese yen at 106.04. A key focus for the yen is a news conference by Prime Minister Abe amid growing speculation over his health. The yen is likely to gain should Abe resign.
The riskier Aussie and Kiwi dollars gained versus the U.S. dollar. The Australian dollar AUD=D3 was changing hands at $0.7246, up 0.2% on the day.
The euro last traded at $1.1807, down 0.2% on the day, after earlier rising to a six-day high of $1.1850.
The British pound stood firm at $1.3194, having gained nearly 8% in three months.
Oil prices were mixed, with Brent crude futures for October, up 0.1% at $45.61 a barrel by 1055 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 0.4% at $43.21 a barrel.
Gold fell on Thursday as investors reassessed their positions and booked profits after a more than 1% jump in the previous session. Spot gold was down 0.7% at $1,940.77 per ounce by 1138 GMT, after rising 1.3% on Wednesday.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money