Written by Peter Niers
Investing.com – The dollar opened the European session on Thursday in a downturn, as the Fed Chairman awaited the scheduled speech on the agenda for the annual symposium hosted by the Federal Reserve. The seminar will start today and will last for two days, amid high expectations from the markets that new and important details regarding the future of monetary policy in the United States may be announced.
At 2:50 AM ET (6:50 AM GMT), it retreated by 0.1% to 92.942, which measures the weighted average of the price of the greenback against a basket of six other global currencies. It traded unchanged at 1.3208, while down 0.1%, to hit 1.1824.
He is scheduled to deliver his speech at the annual conference of central bank governors, which is usually hosted by the Federal Reserve in Jackson Hole, Wyoming, but will be held this year by virtually using communication technology due to the Corona epidemic.
The Fed chief is expected to discuss the results of the central bank’s framework review, a study that began nearly two years ago and aims to explore how the bank should use it to adapt its monetary policy to the low interest rate environment. Powell is scheduled to start his speech at 9:10 am ET (1:10 pm GMT).
Many expect Powell to confirm his support for the current expansion in monetary policy, to ensure that the economic recovery remains on the right track, and this may be done by calling for targeting the rate of inflation. If this occurs, it will mean that the bank will allow inflation levels to rise above the previously announced target level of 2%.
But analyst Robert Carnell of ING Bank asks: “Despite these expectations, there are two small problems. How will the Federal Reserve raise inflation? And how can it make policy more appropriate than it already is?”
“The full credibility of such a strategy depends on the Fed’s ability to convince markets that these goals are achievable. Indeed, this carries with it risks just to draw market attention to the extent to which inflation targets have not yet been met, and this damages credibility,” Carnell adds. More than it enhances credibility. ”
It rose 0.1% to 106.03. Japanese Prime Minister (Shinzo Abe) is expected to address concerns about his health and possibly submit his resignation at the press conference scheduled for Friday.
Markets expect that the Yen will benefit if Abe decides to resign, as his departure could see a shift in the strong easing policy that was one of the most important policies of his era.
Finally, the price fell very slightly to 6.8843, as US-Chinese tensions escalated after China launched 4 medium-range ballistic missiles into the disputed South China Sea on Wednesday, while the United States imposed new sanctions on 24 Chinese companies.
On Thursday, the exchange rate rose to 7.34, after US President Donald Trump urged Greece and Turkey to de-escalate the border dispute between the two countries.
On Wednesday, the Turkish lira briefly reached a record low against the US dollar, to rebound by 03%, and the exchange rate reached 7.34 lira per dollar. The losses of the Turkish lira have decreased from the beginning of the year to today by 19%.
Trump said that Turkish President Recep Tayyip Erdogan and the Greek Prime Minister should pledge to negotiate a settlement in a phone call between the two parties. The escalation reached to conduct military maneuvers between the two countries with naval fleets between Cyprus and Crete.