2023-08-25 18:46:34
The dollar finally held steady once morest the euro on Friday following a short-lived upside reaction to a speech by Fed Chairman Jerome Powell on monetary policy.
The dollar finally held steady once morest the euro on Friday following a short-lived upside reaction to a speech by Fed Chairman Jerome Powell on monetary policy. Around 6:15 p.m. GMT, the dollar gained 0.05% at 1.0805 dollars for one euro and gained 0.08% once morest the pound at 1.2592 dollars for one pound.
“The general tone of Mr. Powell’s speech at Jackson Hole ‘where a meeting of central bankers is taking place’ was one of cautious optimism coupled with a clear determination that we will not take any risk on the evolution of inflation “, summarized Ian Shepherdson, chief economist of Pantheon Macroeconomics.
Acceleration, then return to pre-speech level
The Fed boss reiterated that inflation was “too high”. “We stand ready to raise interest rates further if necessary and intend to maintain a tight monetary policy until we are confident that inflation is sustainably moving towards our target,” he said. -he adds. The dollar first accelerated its rise in reaction to these remarks before returning to its level before the speech.
“I think Mr. Powell has stayed in line with expectations. He is keeping all his options on the table and the evolution of rates will depend on economic data,” Joe Manimbo of Convera Financial Services told AFP.
Ten-year bond yields remained flat at 4.22%. Joe Manimbo discerned “a return of risk appetite which limited the rise of the dollar”.
On the New York Stock Exchange, shares – which had initially reacted in the red in front of the firmness of the words of Jerome Powell, once more suggesting that another rate hike is not excluded -, left then upwards.
Uncertain trajectory
On the side of the European Central Bank (ECB), President Christine Lagarde was also to intervene in Jackson Hole on Friday. Elsewhere in the foreign exchange market, the Turkish lira fell 2.71% to 26.549 pounds to the dollar, suffering from the uncertain monetary policy path of the country’s central bank.
The day before, the currency had indeed jumped once morest the dollar, soaring by nearly 7% following a colossal and unexpected increase in the key rate of the Turkish central bank, from 17.5% to 25%. This tightening was “far beyond the most optimistic expectations of the market”, underlines Tatha Ghose, at Commerzbank.
“The dollar is stronger once morest the Turkish lira, which is giving back a little margin following the spectacular jump we saw in response to the extraordinary rise in rates,” noted Joe Manimbo.
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