The U.S. dollar inched higher on Thursday, hovering just below a one-week peak as investors prepared for the start of the Federal Reserve’s annual Jackson Hole symposium.
At 04:40 ET (08:40 GMT), the Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.1% to 98.114, following a climb to its strongest level since August 12 in the previous session.
Fed Minutes Add Support
The greenback received additional backing after Wednesday’s release of the Federal Reserve’s July meeting minutes, which showed most policymakers remain attentive to labor market trends and inflation. The two members who dissented against keeping interest rates steady last month were not joined by other board members.
“Almost all participants viewed it as appropriate to maintain the target range for the federal funds rate at 4.25% to 4.50% at this meeting,” the minutes of the July 29-30 meeting said.
The Fed has maintained the 4.25%-4.50% policy range throughout 2025, with some members, including Chair Jerome Powell, expressing concern that the Trump administration’s tariffs could rekindle inflation pressures. Weekly jobless claims, expected later in the session, are likely to show slight labor market deterioration following the weak payrolls data at the start of the month.
Trading activity may remain muted on Thursday as market participants await three days of potentially market-moving developments from Jackson Hole.
“We’re all waiting on tomorrow’s speech from Fed Chair Jerome Powell as to how significantly the Fed registered the substantial downward revisions to back-month job data,” said analysts at ING, in a note.
“Before then …we’ll have a speech from the Fed’s Raphael Bostic. He’s recently been saying he could vote for a rate cut soon, although one rate cut this year is his preferred adjustment.”
Euro Supported by PMI Figures
In Europe, the euro edged up against the dollar, with EUR/USD gaining 0.1% to 1.1656. The currency was supported slightly by data indicating eurozone businesses saw new orders rise for the first time since May 2024 in August, driving overall activity to its fastest pace in 15 months despite persistent export weakness.
The HCOB Flash Eurozone Composite Purchasing Managers’ Index, compiled by S&P Global, climbed to 51.1 in August from 50.9 in July, marking the third straight monthly improvement and the highest reading since May 2024. PMI readings above 50 indicate growth, while those below signal contraction.
“EUR/USD is becalmed. It’s fair to say that the optimism over a potential ceasefire/peace deal in Ukraine is now fading,” said ING. “We may see another tight 1.1620-1.1670 trading range in EUR/USD today, with the biggest chance of a breakout remaining Powell’s speech tomorrow.”
GBP/USD also gained 0.1% to 1.3466 following broadly positive U.K. activity readings. The U.K. Composite Purchasing Managers’ Index rose to 53.0 in August from 51.5 in July, above expectations of 51.6.
Calm in Asian Markets
In Asia, USD/JPY edged up 0.1% to 147.55, reflecting slower contraction in Japanese factory activity during August, approaching a return to growth. USD/CNY was slightly higher at 7.1769 after the People’s Bank of China kept benchmark loan prime rates unchanged.
Elsewhere, AUD/USD slipped 0.1% to 0.64234, while NZD/USD held steady at 0.5822 after falling to its lowest level since mid-April following a 25-basis-point rate cut by the Reserve Bank of New Zealand.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Leave a Reply