Investors traded cautiously a day ahead of a key FED speech by its Chairman Jerome Powell who may unveil a softer policy stance towards inflation.
With the COVID-19 pandemic far from over and almost no progress over the next rescue package, all eyes will be on Powell’s address. The key FED speech will take place at the virtual Jackson Hole symposium on Thursday.
Investors are bracing for the possible new steps to prop up the U.S. economy and await the address for an update on the Fed’s stance. Either a policy change announcement or the lack of is expected to resonate strongly across trading floors.
The Fed is thought to be still finalizing details of its review, however, with an announcement expected at its September meeting.
That risks leaving investors disappointed on Thursday if Powell does not announce the change.
A survey on Tuesday showed U.S. consumer confidence was at a six-year low in August. Data later on the day is forecast to show growth in U.S. durable goods orders slowed in July, highlighting policymakers’ concerns about the economy.
The threat of a second wave of the novel coronavirus is also influencing trade as virus hotspots emerge across the world.
START TRADINGForex – Key FED speech ahead makes investors nervous
Currency markets are in subdued mood ahead of the key Fed speech.
The dollar gained on Wednesday but stayed within a relatively tight range.
The dollar index was up 0.15% at 93.11 after taking a hit on Tuesday following U.S. consumer confidence data. The index hit a session high of 93.37 after data showed that U.S. durable goods orders increased more than expected in July but fell back again.
The dollar was locked into a narrow range against the yen, last trading at $106.23.
The euro dipped 0.26% against the greenback to $1.1802.
The British pound bought $1.3135 having risen 0.7% against the dollar on Tuesday. Sterling has managed to shrug off a lack of progress in trade negotiations between Britain and the European Union. Brexit uncertainty kept traders on the sidelines.
Sterling was steady at $1.3155 and rose 0.2% to 89.84 pence against the euro. The British currency has been dragged higher in recent weeks by a weakening U.S. dollar.
Oil edged up towards $46 a barrel on Wednesday, close to its highest since March. U.S. producers shut most of their offshore Gulf of Mexico output ahead of Hurricane Laura. Further, a report showing a drop in U.S. crude inventories lifted prices.
Brent crude rose 8 cents, or 0.2%, to $45.94 a barrel by 1331 GMT. U.S. WTI crude added 26 cents, or 0.6%, to $43.61. Both benchmarks settled at a five-month high on Tuesday.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money