USD climbs ahead of Powell speech
The US dollar strengthened overnight ahead of a key speech from Federal Reserve chair Jerome Powell.
Markets may be getting ahead of themselves, with a 72% chance of a rate cut priced in for next month despite rising inflation and Powell’s recent signals to hold steady.
Powell speaks at midnight tonight at the annual Jackson Hole Symposium – a major gathering of global central bank leaders.
Ahead of the event, the US dollar index rose to a two-week high.
Aussie drops to two-month low
The stronger greenback weighed on other major currencies. EUR/USD fell 0.4%, GBP/USD dropped 0.3%, and NZD/USD edged down 0.1%.
In Asia, the yen underperformed, with USD/JPY up 0.7% and USD/SGD up 0.3%.
AUD/USD slipped 0.2%, breaking below support at 0.6420 and hitting a two-month low. The pair is now in a clear downtrend, with the 8-, 21-, and 200-day moving averages all pointing lower. Next support for the Aussie sits at 0.6375.
Safe havens slide as PMIs beat
The yen’s weakness extended to other safe havens, with USD/CHF up 0.6% as investors turned cautious ahead of Jackson Hole.
Improving economic data may also be weighing on safe haven demand. Global PMIs released yesterday mostly beat expectations, showing stronger activity in manufacturing and services.
France, Germany, and the eurozone all posted better-than-expected results. Australia showed improvement, while the US continued to lead.
Aussie, kiwi pressured this week
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 18 – 22 August
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.ve a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
