- Focus on Jackson Hole meeting
- Dollar edges up vs basket of six major currencies
The dollar inched higher against a basket of currencies on Tuesday, with traders focusing on the annual central banking conference in Jackson Hole this week for insights into the outlook for monetary policy.
The dollar index, which measures the greenback’s value against a basket of six major currencies, edged up 0.1 percent to 93.169.
The near-term focus is on a speech by U.S. Federal Reserve Chair Janet Yellen on Friday at the Fed’s annual central banking conference in Jackson Hole, Wyoming.
If Yellen’s speech increases market expectations that the Fed will raise interest rates in December, that could prompt investors to unwind bearish bets against the dollar, and lend the greenback some support, said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.
“This could be a platform for the U.S. dollar,” Innes said, referring to the Jackson Hole conference.
The dollar rose 0.3 percent to 109.26 yen, pulling away from last week’s low near 108.60 yen, which was the greenback’s weakest level in about four months.
The greenback has been hampered in recent days by renewed investor concerns about the Trump administration’s ability to implement its economic policy agenda.
Persistent doubts about the prospects for another Fed interest rate hike this year, at a time of subdued U.S. inflation, have also weighed on the dollar.
The euro slipped 0.1 percent to $1.1808.
The common currency has lost some steam after hitting a 2-1/2 year high near $1.1910 in early August. It has, however, managed to pull up from a three-week low of $1.1662 set last Thursday.
Mitul Kotecha, head of Asia macro strategy for Barclays in Singapore, said the euro’s upside may be limited in the near term even though it has shown some resilience because of the market’s caution toward the dollar.
“It’s hard to see where the additional source of strength for the euro is going to come from,” he said.
The euro seems to have already priced in several positive factors, such as an improvement in the euro zone’s economic outlook, Kotecha added.
Investors are awaiting remarks from European Central Bank President Mario Draghi due on Friday at Jackson Hole, although whether his comments will provide any fresh impetus for euro buying is uncertain.
Draghi will not deliver a new policy message at the symposium, two sources familiar with the situation have said, tempering expectations for the ECB to start charting the course out of its monetary stimulus.