U.S. Dollar Remains Weaker After Powell’s Speech
AUGUST 30, 2021
The U.S. dollar is mostly flat to start the week, unable to recoup some of its steep losses from Friday.
During his much-anticipated speech in Jackson Hole, Fed Chairman Jerome Powell said that the central bank may start paring back its bond purchases later in 2021. But he made it abundantly clear that the Federal Reserve is in no rush to normalize interest rates, especially because of the coronavirus risks to the economy.
U.S. equities rallied to all-time highs following the dovish speech, at the expense of the U.S. dollar. Friday’s drop was the biggest for the greenback since May and the Dollar Index hit a two-week low.
U.S. pending home sales data for July will cross the wire at 10 a.m., followed by the Dallas Fed manufacturing survey at 10:30 a.m. The largest economic risk event on this week’s calendar is the U.S. jobs report on Friday. The U.S. is also planning on sticking to its plan to pull out almost all American troops from Afghanistan by tomorrow so there is also plenty of geopolitical risk on the table this week.
What to Watch Today…
- Pending Home Sales at 10 a.m.
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The Euro is holding on to its gains from Friday’s session where the common currency traded to a three-week high against the greenback. Data showed that confidence in the euro-area economy slipped for the first time this year amidst increased worries about the delta variant and supply disruptions. The gauge for sentiment fell to 117.5 in August from an all-time high in July.
The Canadian dollar was mostly flat against the U.S. dollar to start the week. Traders of commodities and commodity-based currencies are keeping a close on developments on the Gulf coast. Hurricane Ida made landfall in Louisiana as a category 4 storm. Much of New Orleans is without power and it is yet to be seen as to whether the safety improvements put in place after Hurricane Katrina will be enough to protect the region.
The price of oil is a touch lower at the time of writing as reports came in that local oil rigs have escaped significant damage, a welcome sign for those worried about disrupted energy supplies.
OPEC+ will meet on Wednesday with many analysts expecting the cartel to support a supply increase.