Dollar steadies with Fed chief Powell set to speak again

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In the early trading session in Europe on Wednesday, the value of the U.S. dollar decreased slightly, giving up some of the gains it had made in the previous session. However, trading is currently limited as traders are anticipating further insights on monetary policy from various central bankers, including Jerome Powell, the Chair of the Federal Reserve.

The Dollar Index, which measures the strength of the US dollar against multiple international currencies, declined by 0.1% to 105.382 at 03:20 Eastern Time (07:20 Greenwich Mean Time). This drop came after the index had previously recovered from a low point of 104.84, which had been reached earlier in the week and had lasted for nearly two months.

Powell steps up again

Last week, the value of the dollar dropped significantly due to growing certainty that the Federal Reserve has stopped increasing interest rates. However, this week, there has been a period of stability as several Fed officials cautioned against becoming too relaxed.

Patrick Harker, President of the U.S. Federal Reserve Bank of Philadelphia, stated on Wednesday that it is improbable for the policy rate to decrease in the near future.

Nevertheless, trading activity is expected to be subdued on Thursday due to Federal Reserve Chairman Jerome Powell’s upcoming speech. He refrained from discussing significant matters related to monetary policies during a recent event on Wednesday.

“In a note, analysts at ING stated that the central focus today, and likely for the entire week, will be on Fedspeak due to a lack of significant data releases from the United States.”

Europe is also paying attention to the speeches of central bank officials.

In Europe, a comparable situation is unfolding where the Chief Economist of the European Central Bank, Philip Lane, and the Chief Economist of the Bank of England, Huw Pill, are scheduled to speak at different events. It is anticipated that any remarks made by them will have an impact on the market as there is not much economic activity happening at the moment.

The euro to US dollar exchange rate remained steady at 1.0707. It had experienced some decline in the previous session due to a decrease in retail sales by 0.3% in the eurozone during September.

The currency pair GBP/USD remained mostly the same at 1.2284, after reaching a high of 1.24 earlier in the week, which was the highest it had been in seven weeks.

Chinese disinflation weighs on the yuan

In Asia, the USD/CNY increased by 0.1% to reach 7.2856, following the release of Chinese government data indicating a decrease in both consumer and producer inflation during October.

According to the readings, it was observed that China experienced a second period of disinflation this year, despite numerous attempts by the government to stimulate spending, which ultimately did not have a significant effect.

The USD/JPY currency pair decreased by 0.1% to reach a value of 150.93, moving away from the 151 level. This level had been briefly surpassed the previous week after the Bank of Japan gave indications of a more accommodative monetary policy.

Traders are currently cautious about the possibility of government interference in the foreign exchange markets, as the currency is now being exchanged at levels similar to those observed during the beginning of the economic downturn in the early 1990s.

In English language, the AUD/USD currency pair increased by 0.2% to reach a value of 0.6414. This rise indicates that the Australian dollar has stabilized following the Reserve Bank of Australia’s pronouncement of less optimistic economic outlook, which caused significant declines earlier in the week.