Ahead of Fed Reserve chairman speech currency markets remain in subdued mood
LONDON (UK) – With investors refusing to place risky bets a day ahead of a much-awaited key speech by Federal Reserve Chairman Jerome Powell, the greenback and the euro traded cautiously on Wednesday.
There is speculation that Powell could announce a softer policy stance towards inflation at the annual Jackson Hole retreat on Thursday. Investors are bracing for the new measures to bolster the US economy.
“Targeting average inflation over time rather than setting a fixed 2% goal would likely mean lower rates for longer,” said Raffi Boyadjian, senior investment analyst at online broker XM.
“Hence, if the Fed confirms such a move, the greenback would stand little chance of a meaningful rebound anytime soon”, he added. The mood in the currency markets is somewhat subdued because of the uncertainty that is prevailing.
“Either the Chairman drops something juicy for “reflationistas” or the USD rips higher for a few weeks”, Stephen Innes, chief global markets strategist at AxiCorp, said.
“I would never bet against the Fed sounding dovish during an easing cycle”, he added.
The dollar index was up 0.1% at 93.11 after taking a hit on Tuesday after data revealed that US consumer data slid to its lowest in more than six years.
Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.