A firm Dollar awaits Fed’s Powell

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All eyes are on the Kansas City Fed’s Jackson Hole Symposium. On Friday, ECB’s Lagarde and the Fed’s Powell will speak. During the Asian session, the Tokyo Consumer Price Index is due. Later in the day, a new reading of German GDP and the IFO survey will be released, and later the University of Michigan’s Consumer Sentiment report.

Here is what you need to know on Friday, August 24:

After a brief correction, the US Dollar Index bounced back and climbed above 104.00, reaching its highest level since early June. Fundamental factors, risk aversion, and higher US Treasury yields continue to support the Greenback.

Market attention is focused on Jackson Hole. First, European Central Bank (ECB) President Christine Lagarde will speak at 11:00 GMT, followed by Federal Reserve (Fed) Chair Jerome Powell at 14:00 GMT. Volatility is expected, and it could lead to sharp moves across financial markets.

Data for the US on Thursday came in mixed but did not weigh down the US Dollar. On Friday, the University of Michigan will release its Consumer Sentiment report. 

Comments from Federal Reserve officials pointed in different directions, with Fed’s Harker mentioning that they have probably “done enough” with policy while Fed’s Collins warned that more rate hikes are possible.

The 10-year US Treasury yield rebounded but remained below recent highs, reaching 4.2%, while the 2-year yield climbed back above 5%. The higher yields weighed on the Japanese Yen, which was among the worst performers despite a decline in US stocks. USD/JPY rose from 144.65 to 145.85, awaiting Powell near monthly highs.

EUR/USD dropped back to 1.0800. The pair is trading with a bearish bias, slightly above the 200-day Simple Moving Average (SMA). ECB President Lagarde will speak at Jackson Hole on Friday. As for data, a new reading of German Q2 GDP and the IFO Survey are due.

USD/CHF consolidated above 0.8800 and posted the highest daily close in a month near 0.8850. Switzerland will release employment data for the second quarter on Friday.

GBP/USD resumed its downside after failing to hold above the 20-day SMA at 1.2740, tumbling below 1.2600 to reach fresh monthly lows.

AUD/USD gave up Wednesday’s gains and approached the 0.6400 mark. NZD/USD failed to regain 0.6000 and dropped to 0.5920. The Antipodean currencies remain under pressure amid cautious market sentiment.

The Turkish lira was the top performer after a larger-than-expected rate hike from the Turkish central bank. USD/TRY plummeted from 27.00 to 25.60.