The U.S. dollar or the greenback as people like to call it steadied on Friday as investors awaited a highly anticipated speech by Jerome Powell. Analysts think that the Federal Reserve’s Chair is not likely to hint when he may start to reduce asset purchases.
The main topic of this week is the central bank’s annual conference in Wyoming. The market was focused on what signals the Fed could send at its conference which kicked off on Thursday. But the main part of the conference is Jerome Powell’s speech. In the past, Fed bosses used this event to provide guidance on future policy.
Several regional Fed chiefs downplayed on Thursday the impact of Delta coronavirus variant in separate interviews. One of them is St. Louis Federal Reserve’s President James Ballard. He noted that the Federal Reserve should begin curbing its monthly stimulus effort in the near future. He also mentioned that the members are “coalescing” around a plan to begin reducing its $120 billion in monthly bond purchases.
Analysts doubt Jerome Powell will signal when the Fed may start to cut its asset purchases just yet. Currently, the rough consensus in the market is that the central bank’s Chair will announce tapering in the fourth quarter. Any move away from “a more cautious approach” could give a boost to the U.S. dollar.
U.S. dollar and other currencies
The dollar index was little changed on Friday, exchanging hands at 93.046 by 08:20 GMT.
Benchmark 10-year Treasury note yields were last at 1.3458%, after reaching 1.375% following James Ballard’s comments, the highest since August 12.
Overnight, the greenback got some support after a suicide bomb attack at Kabul airport. Unfortunately, as a result of the bomb attack at Kabul airport at least 90 people lost their lives. The bombings came hours after Western governments warned their citizens to stay away from Hamid Karzai International Airport.
The attack at Kabul airport is likely to significantly complicate the effort to airlift thousands of people out of the country. It was quite difficult to evacuate people due to various factors. Even before the attack, several countries announced that they could no longer conduct flights.
The euro and British pound were little changed at $1.1754 and $1.3702.
The New Zealand dollar fell after Prime Minister Jacinda Ardern’s announcement. She noted that a lockdown in Auckland is likely to remain in place for a further two weeks.