U.S. Dollar Remains Flat After GDP; Volatility Falls Ahead of Powell Speech


U.S. Dollar Remains Flat After GDP; Volatility Falls Ahead of Powell Speech

AUGUST 26, 2021

The U.S. dollar remains in tight ranges for a second straight day as market participants continue to wait for Jerome Powell’s speech.   


Global equities are mostly in the red, but the U.S. dollar has largely failed to take advantage.  The Bloomberg Dollar Spot Index is 0.1% stronger.

Data this morning showed that the U.S. economy grew at 6.6% in the second quarter.  The second release of GDP was slightly lower than the expected 6.7% but still shows growth in the second quarter was fairly impressive.  Personal consumption rose 11.9% during the same period, beating 11.4% in the first quarter.  A lack of a major surprise has allowed the dollar to remain in pre-data ranges.

Attention will quickly shift to tomorrow.  In the morning, July U.S. personal income and spending data will be released.  At 10 a.m., Federal Reserve Chairman Jerome Powell will give his much-anticipated speech at the Jackson Hole symposium.  We expect that Powell will give markets guidance on how the central bank plans to taper its emergency monetary support.  In the unlikely event that his speech lacks guidance, equities could shoot higher at the cost of the U.S. dollar.

Regardless, volatility will be elevated tomorrow morning.

What to Watch Today…

  • No major economic events are scheduled for today

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EUR/USD is mostly unchanged overnight.  Volatility in the Euro has fallen in recent weeks. It is easy to point to the “summer slowdown” as the culprit.   The European Central Bank released the minutes of their July meeting this morning, which has also failed to move the currency.  The most noteworthy headline is that the ECB said that its reformulated guidance doesn’t necessarily mean “lower for longer” interest rates if it succeeds in anchoring inflation expectations at the target.

While rather technical, the statement could have a modest upside for the Euro in the longer term.  However, today’s move has been quite muted.  Indeed, the Euro jumped only 0.05% after the release.


The Australian and New Zealand dollars along with other commodity-based currencies are under pressure this morning.  Australia and New Zealand are suffering due to recent outbreaks of coronavirus in each country.  Fears are increasing that New Zealand will have to extend lockdowns as Prime Minister Jacinda Arden said that she is hesitant to say that cases have peaked.

The Canadian dollar is off slightly as the price of oil retreated.  It is worth noting that oil is still around 10% higher over the last three trading sessions.