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US Dollar Rises as Fed Chair Powell Speaks in Jackson Hole
The US dollar rose during trading on Thursday, August 21, ahead of Federal Reserve Chairman Jerome Powell's much-anticipated speech on Friday, during which the market will be looking for any new insights regarding the path of interest rates in the coming period.
For a brief period during Thursday's trading, the US currency lost some of its gains after data revealed that the number of applications for unemployment benefits in the United States increased at the fastest pace in nearly three months last week.
However, the dollar regained its gains after a separate report indicated that US business activity accelerated this month, led by the manufacturing sector, which saw the largest increase in orders in a year and a half.
The dollar index, which measures the performance of the US currency against a number of other major currencies, rose 0.45% to 98.66, while the euro fell 0.40% to $1.1604.
The Japanese currency fell against the dollar, which rose 0.73% to 148.39 yen. The British pound fell 0.33% to $1.3412.
Traders increased their bets on a rate cut at the Federal Reserve's next monetary policy meeting on Tuesday and Wednesday, September 16 and 17, following last month's weaker-than-expected US jobs report.
However, the risk of rising inflation due to the imposition of new US tariffs this month remains a difficult factor to predict, leaving some Fed policymakers uncertain about monetary policy easing.
Eric Theoret, a foreign exchange analyst at Scotiabank in Toronto, commented on these developments, saying that the theme of this year's Jackson Hole symposium is "Labor Markets in Transition," and "I think it depends on how much (Powell) is willing to exploit labor market gaps."
In a separate statement on Thursday, the United States and the European Union announced their commitments to the framework trade agreement they reached in July. This includes imposing a 15% US tariff on most imports from the bloc, including automobiles, pharmaceuticals, semiconductors, and timber.
