US Dollar Near its Lowest Level in a Week Before the US Fed Chairman’s Speech

The dollar remains near its lowest level in a week which it reached earlier Thursday 27 August, before a speech by US Fed Chairman Jerome Powell is expected to hint that the bank will adjust its policy framework to help raise inflation.

Powell is scheduled to deliver his speech at the annual conference of the Federal Reserve of Central Bank Presidents by 13:30 GMT, which is usually held in Jackson Hole, Wyoming, but it will take place this year virtually due to the Covid-19 pandemic.

The change is likely to mean that the US Federal Reserve will base its monetary policy on future inflation data, not expected, while it will clearly accept exceeding its target for inflation. This means that the Fed will keep interest rates at their current low levels for a longer time compared to past crises, which in turn will weaken the dollar.

The euro last traded at $ 1.1822, after rising to its highest level in six days at $ 1.1850 earlier.

The dollar index, which tracks the performance of the US currency against a basket of six currencies, settled at 92.98, near its weakest level this week and not far from the lowest level in two years at 92.12, which it touched last week.

Since the start of the pandemic, the US central bank has expanded its balance sheet by nearly $ 3 billion, far more than the European Central Bank and the Bank of Japan.

The dollar settled against the Japanese yen at 106.02. The main focus of Yen is on a press conference of Prime Minister Shinzo Abe, scheduled on Friday, amid growing speculation about his health. And the yen is likely to rise if Abe quits.

The pound settled, up at $ 1.3215, after it had gained about 8% in three months. The Australian dollar was trading up 0.1% during the session at $ 0.7243.

The Chinese yuan recorded its strongest level since January, after data showed a recovery in the profits of industrial companies in China. The yuan settled in foreign trade at 6.8748 to the dollar, the highest level since January 21.

The market appeared to be ignoring the latest sign of mounting tension between the US and China. On Wednesday, the United States blacklisted 24 Chinese companies and was targeting individuals due to construction activities and military actions in the South China Sea.