Dollar Steady Ahead of Powell Speech
The US dollar held gains and is poised for a weekly gain ahead of Fed Chairman Jerome Powell's speech in Jackson Hole on Friday. The Bloomberg Dollar Spot Index stabilized after rising 0.4% on Thursday and is now up 0.7% for the week, as the chance of a 25-bps rate cut in September fell to 66% from nearly 100% previously.
In the options market, one-month risk reversals turned the most bullish this month, while one-week euro riskies were the most bearish since the August 1 payrolls release—reflecting expectations that Powell will correct pricing in the currency market. The 10-Year US Treasury yield was virtually unchanged at 4.33%.
For major pairs, EUR/USD fell 0.1% to 1.1597 (-0.9% for the week). Interbank and leveraged traders took advantage of cheaper bullish options and the decline in spot rates; DTCC positioning data shows two out of three vanilla trades this week were actually betting on dollar weakness (contrary to the recent move).
Elsewhere, EUR/GBP fell 0.1% to 0.8646, while EUR/CHF was flat at 0.93865. USD/JPY rose 0.2% to 148.62 and posted a 1% weekly gain—the highest since early July—as Japanese core inflation remained above 2%, albeit starting to decline. The market awaits Powell; potential volatility remains high. (ayu)
Source: Newsmaker.id
