The dollar on Wednesday experienced losses against most currencies as traders are on a lookout for the U.S. data that is expected to show a decline in durable goods orders and a key speech by Federal Reserve Chairman Jerome Powell.
On Tuesday, the data shows that U.S. consumer confidence slid lower in more than six years due to the job losses that are caused by the coronavirus pandemic. This seems to wound the dollar once again and may hit back in a recession.
Traders will be looking out for Powell’s speech this Thursday at the annual Jackson Hole Retreat to determine any intervention the Fed is willing to take to protect the economic recovery.
“I expect Powell to use forward guidance to send a dovish message that rates will remain low for a long time, which feeds into the dollar weakness,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.
“You could say we are in a long-term correction of excessive dollar strength”
The dollar stood at $1.18333 against the euro on Wednesday following a 0.4% decline in the previous session.
On Tuesday, the British pound bought $1.31419 having risen 0.7% against the dollar.
There is also a lack of progress by the sterling in regards to trade negotiations between Britain and European Union.
Against the yen, the dollar managed to procure some gains trading at 106.35.
Powell’s speech at the Jackson Hole, which will be held online due to the pandemic might be the biggest event for the week, but the results of the data calendar leading to Thursday seems disappointing.
On Wednesday, data shows of U.S. durable goods orders slowed in July followed by the reports of decreased consumer confidence which fell to the lowest since may 2014.
Asian investors are closely monitoring the yuan too see if the Chinese currency continues to ride a wave of optimism after Washington and Beijing affirmed their trade deal.
Due to a lack of major economic releases during the Asian session, trading in other currencies could be subdued.
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