(Adds byline and NEW YORK dateline; updates prices throughout, adds tables; analyst comments in paragraphs 3, 4, and 15) by Samuel Indyk and Laura Matthews Reuters, NEW YORK/LONDON, August 21 – As speculators maintained onto huge holdings in the dollar ahead of the Federal Reserve’s Jackson Hole, Wyoming, symposium beginning on Friday, the dollar was little changed to slightly higher against a basket of its counterparts on Monday, recovering some of its previous losses. The dollar index, which compares the value of the dollar to six other major currencies and has increased for five weeks in a row, last increased 0.068% to 103.440, remaining short of the 100 mark.
Of the 103.68 two-month high set on Friday. According to Karl Schamotta, chief market strategist at Corpay in Toronto, as yields in the UK and Europe catch up with those in the US, the widening in predicted growth differentials is currently the big trade in the global market. According to Schamotta, “the dollar does seem to be the cleanest dirty shirt on the global economic landscape.” “Traders are taking rather large positions in the dollar as Jackson Hole approaches, just in case Chair Powell announces a more hawkish view on data recently.Sterling last traded at $1.2736, down 0.03%, while the euro was up 0.1% at $1.0889. The intervention-watched Japanese yen dropped 0.65% to 146.35 per dollar against the USD. The threshold for currency market intervention, according to experts at JP Morgan, is somewhere around 150 per dollar this time around, even though the yen has dropped to levels where government intervened last year. The Chinese yuan, which increased 0.2% in offshore markets to $7.29 per dollar against the dollar, is another currency that should be watched for intervention. Earlier, the currency declined to the lower end of the 7.3 per dollar range.
Increasing the cost of shorting the currency after Reuters reported that state-owned Chinese banks had been spotted actively snatching up offshore yuan liquidity. Contrary to experts’ predictions, China previously reduced its benchmark lending rate for loans of one year by 10 basis points (bps) and left its benchmark lending rate for loans of five years constant. Jerome Powell, the chairman of the Federal Reserve, is scheduled to appear in the United States on Friday, and his words could influence the path of U.S. Treasury yields, which have recently fueled the ascent of the dollar. On Monday, 10-year rates jumped to a 15-year high and recently increased 8.7 basis points to 4.337%. The yearly gathering in Wyoming’s subject this year is “structural transformations in
the world’s economy. Although China’s stimulus was unimpressive, Joe Manimbo, senior market analyst at Convera in Washington, said, “Hopes remain high for more action should the economy continue to slow.” “Whether the Fed chair should emphasise how inflation is still too high will be important for the dollar and wider markets this week. The dollar may begin to falter after weeks of gains, especially given that U.S. borrowing costs are probably at or close to their peaks. Bitcoin last decreased 0.8% to $25,985 while Ethereum last increased 0.3% to $1,661.60.
11:46AM (1546 GMT) Description YTD Pct High Bid Low Bid RIC Last U.S. Close Pct Change Earlier Change Dollar-based session index $1.0884 $1.0873 +0.11% +1.58% +$1.0914 +$1.0871 Dollar/Yen 146.3500 145.4100 +0.66% +11.64% +146.3950 +145.1450 Euro/Yen 159.29 158.03 +0.80% +13.54% +159.3800 +157.8000 Dollar/Swiss 103.4400 103.3900 +0.07% -0.048% +103.5000 +103.1300 Dollar/Canadian 1.3564 0.8802 0.8828 -0.27% -4.79% +0.8827 +0.8788 Sterling/Dollar $1.2727 $1.2736 -0.06% +5.25% +$1.2765 +$1.2711 Aussie/Dollar: 1.3551 +0.10% +0.11% +1.3567 +1.3497 $0.6389 $0.6405 -0.23% -6.26% Euro/Swiss: +0.6421 +0.6389 USD Euro/Sterling: 0.9580 0.9587 -0.07% -3.18% +0.9601 +0.9573 0.8551 0.8539 +0.14% -3.31% +0.8562 +0.8534 NZ $0.5897 Dollar to Dollar Dollar/Norway: $0.5924 -0.42% -7.10% +$0.5936 +$0.5897 Euro/Norway: 10.6280 10.6540 -0.20% +8.35% +10.6600 +10.5530 11.5727 Dollar/Sweden: 11.5632 +0.08% +0.28% +11.5920 +11.5110 Euro/Sweden 10.9738 10.9756 +0.05% +5.44% +10.9981 +10.9023 11.9452 11.9395 +0.05% +7.14% +11.9644 +11.8940 (Editing by Kirsten Donovan, Mark Potter, and Jonathan Oatis; reporting by Laura Matthews in New York and Samuel Indyk in London; additional reporting by Tom Westbrook in Singapore)