Yahoo Finance Dollar Little Changed Ahead of U.S.-China Talks, Fed Minutes, Powell
Investing.com - The dollar was little changed on Monday, hovering near 14-month highs against major rivals, as investors awaited a full week of references with U.S.-China trade talks on the bill as well as minutes from the last policy meeting of the Federal Reserve and a speech from the U.S. central bank chief Jerome Powell.
At 11:35AM ET (15:39GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.02% to 96.02, after falling 0.5% on Friday, the largest one-day decline in almost a month.
The dollar’s rally stalled ahead of expected trade talks between Chinese and U.S. officials in Washington on Wednesday and Thursday. Hopes for a thawing of trade tensions between the world’s two largest economies eased demand for the safe-haven dollar.
Yet eyes in currency markets remained focused on the Turkish lira as the currency continued its decline.
The Turkish lira weakened on Monday after the country’s credit rating was cut further into junk territory on Friday and following reports of shots being fired at the U.S. embassy in Ankara.
USD/TRY was up 2.07% to 6.1421 by 11:39 AM ET (15:39 AM GMT). The lira has recovered from the record low levels of around 7.2 per dollar that it reached just over a week ago, but is still down more than 20% for the month to date.
Both Standard & Poor’s and Moody’s downgraded Turkey’s sovereign credit rating on Friday amid the currency crisis in the country.
S&P cited “extreme lira volatility,” while Moody’s warned of “further weakening of Turkey’s public institutions and the related reduction in the predictability of Turkish policymaking.”
Market participants will also be paying close attention to any signals from the Fed this week on the future path of monetary policy.
On Wednesday, investors will get the chance to parse through the minutes of the Federal Reserve’s August meeting, when it left interest rates unchanged and indicated that it remains on track for additional rate hikes this year.
On Friday, Jerome Powell is to make his first appearance as Fed chairman at the annual economic symposium in Jackson Hole.
Investors will be on the lookout for any tweaks to the Fed’s outlook on inflation, the economy and trade war fears.
Markets are currently expecting the next rate hike to occur in September, with odds of an additional increase in December hovering around 63%.
Ahead of the Jackson Hole Economic Symposium, the dollar traded flat against indivual rivals, including the pound, euro and yen.
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