The dollar rose to a three-week peak against the on Friday ahead of a speech from Federal Reserve Chair Jerome Powell.
Investors expected Powell to express some reluctance to embark on a long rate-cut cycle after a chorus of Fed officials voiced a similar sentiment.
Powell will address the Jackson Hole symposium of central bankers at 1400 GMT on Friday. Traders are waiting to see how closely he allies himself with the hawks within the Fed.
Currency markets have in recent months been driven by a shift at global central banks to looser monetary policy. Economic demand slows and trade disputes intensify. Expectations that the Fed will cut rates at its next meeting in September have been fully priced into interest rate futures. But the forex market is likely to react if Powell’s comments do not match the dovish expectations. Money markets price in at least two rate cuts of 25 basis points this year.
In early morning trading, the euro was down 0.2% at $1.1061, after touching a three-week low of $1.1052. The dollar gained and 10-year U.S. Treasury yields rose to a one-week high of 1.663%. An index that tracks the dollar against six major currencies was up 0.2% at 98.325.
START TRADINGForex – Three-week peak for dollar ahead of Powell speech
Market attention is focused on a speech by U.S. Federal Reserve chief Jerome Powell.
The dollar was also up 0.1% versus the yen at 106.52, after hitting a one-week high of 106.73.
Views that rates may not go as low as previously expected also bolstered the New Zealand dollar. The Kiwi jumped from a three and-a-half-year low of $0.6362 reached Thursday, trading up 0.4% at $0.6387.
The euro fell to three-week lows on Friday. Rising U.S. bond yields boosted the dollar before a speech by the head of the Federal Reserve. Some investors believe will see him signal reluctance to embark on a long rate-cut cycle. The euro was down 0.2% at $1.1055, a three-week low.
Gold edged lower on Friday, heading for its first weekly decline in four. Investors locked in profits from bullion’s recent strength as they awaited clarity on U.S. interest rate cuts. Spot gold was down 0.3% at $1,494.76 an ounce by 1112 GMT.
Silver gained 0.3% to $17.05 an ounce, while platinum eased 0.1% to $856.28.
The pound gave back some of the gains made. On Thursday Angela Merkel said Britain had time until Oct. 31 to come up with a solution to the Irish border problem. The British currency fell 0.4% to $1.2208. Against the euro, it fell 0.2% at 90.58 pence.
In commodities, oil prices fell sharply on Friday after China unveiled retaliatory tariffs against about $75 billion worth of U.S. goods.
Brent crude fell 88 cents to $59.04 a barrel by 1327 GMT, while WTI crude slid by $1.33 to $54.02.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money