Dollar dips ahead of key monetary policy summit
Monday 23 August, 2021
Daily Currency UpdateUSD - United States DollarDemand for the US dollar dipped against a basket of currencies after the US Dollar Index hit a nine-month high last week. According to some analysts the spread of the COVID-19 Delta variant may derail the US Federal Reserve’s plan to start easing stimulus by the end of the year. The US Dollar Index was down 0.44%, trading at 93.09 at the time of writing.Federal chair Jerome Powell will discuss the effects of the pandemic and the US economic outlook at the Jackson Hole Economic Policy Symposium, which kicks off on Thursday, Aug. 26. The annual gathering was moved online because of growing concerns around the more transmissible Delta variant.
Key Moversurozone PMI data showed that the Eurozone outperformed the UK in August, an outcome that might be keeping the pound-to-euro exchange rate under some pressure. Euro traders will be looking ahead to tomorrow’s German GDP data for the second quarter. EURUSD was up 0.29%, trading around 1.1728, while EURGBP was down 0.30% at the time of writing.The pound came under some notable selling pressure last week, mostly as a result of some disappointing UK data, as well as concerns over a rise in new domestic COVID-19 cases. Last week’s UK CPI data revealed that inflation cooled more than expected last month. This weakened the appeal of GBP as it dampens the prospect of the Bank of England seeking to tighten its monetary policy in the near term. There was some upbeat news from UK Manufacturing PMI data today, which read at 60.1 vs. expectations of 59.5. GBPUSD was up 0.61% this morning, trading around 1.3703.Last week was one to forget for the Aussie dollar with a near perfect storm of events conspiring to undermine demand for the commodity linked currency. It was a combination of ‘bad news for the Aussie and safe haven bid for the USD’ that saw the AUDUSD fall to its lowest point since November 2020. On the Australian side of the pair, COVID-19 continued to be the headline act domestically with two-thirds of Australians now finding themselves in some form of lockdown. AUDUSD was up 0.78% this morning, trading around 0.71875.
- EUR/USD: 1.1693 - 1.1743 ▲
- GBP/USD: 1.3618 - 1.3719 ▲
- AUD/USD: 0.7128 - 0.7202 ▲
- USD/CAD: 1.2685 - 1.2833 ▼