By Yasin Ebrahim
Investing.com – The dollar remained flat Wednesday in subdued trade amid expectations that the annual Jackson Hole symposium later this week is unlikely to offer up the sort of monetary policy surprise that will trigger wild moves.
The , which measures the greenback against a trade-weighted basket of six major currencies, fell 0.08% to 92.83.
Friday’s Jackson Hole event has been earmarked as the key risk event for markets on expectations that Federal Reserve Chair Jerome Powell will lay the ground for a bond tapering announcement later this year.
But as the symposium draws closer, the dollar has been on the back foot and trading action has been subdued, suggesting that currency markets aren’t anticipating meaningful clues on the Fed’s plan to taper its bond purchases.
“FX volatility remains near the lows as investors remain unconvinced that Jackson Hole will light a fire under markets,” ING said in a note. “The gains earlier this week of riskier currencies against the dollar seem to be fizzling out, but there have been good local,” it added.
Still, investors are likely to parse Powell’s remarks very carefully to gauge whether rising Covid-19 cases in the U.S. are on the Fed’s radar, potentially providing the central bank with further room to maintain the status quo on monetary policy for a while longer.
“The market will examine Powell’s speech very carefully for the Fed’s evaluation of risks in connection with the spread of the delta variant,” Commerzbank (DE:) said in a note.
The latest positioning data on the dollar added credence to expectations that the Jackson Hole event is unlikely to provide meaningful insight into the Fed’s thinking on monetary policy.
The value of the net long dollar position declined to $1.06 billion in the week ended Aug. 17, from $3.08 billion in the previous week, according to Reuters calculations and Commodity Futures Trading Commission data released on Friday.
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