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Greenback slides from two-decade peak ahead of Fed’s announcement
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On par: A US$100 bill lies on top of euro bills in Bogota on July 12. The euro struck parity with the dollar for the first time in nearly 20 years on that day. (AFP/Daniel Munoz)
T
he US dollar edged back from near a two-decade peak against a basket of major currencies on Thursday as investors looked to a speech by Federal Reserve Chair Jerome Powell the following day for fresh clues on the path for monetary policy.
The dollar index, which measures the greenback against six counterparts, eased 0.15 percent to 108.47, but remained not far from its highest since September 2002 at 109.29, touched in mid-July.
Investors have been bracing for the Fed to double down on its commitment to crushing inflation at its annual gathering in Jackson Hole, Wyoming.
Money markets have pared back expectations that the US central bank could tilt to a slower pace of rate hikes following a chorus of hawkish Fed commentary in recent weeks, and currently lay 60.5 percent odds on another super-sized 75 basis-point rate hike next month versus 39.5 percent probability of a half point increase.
"Expectations of a hawkish message from FOMC Chair Powell at Jackson Hole will likely keep upward pressure on the USD," Commonwealth Bank of Australia analyst Kristina Clifton wrote in a client note.
"However, there is a risk that the speech is deemed not hawkish enough and that we see some retracement in the USD."
The dollar retreated 0.25 percent to 136.775 yen, but remained not too far from this week's one-month high of 137.705.
The euro edged 0.14 percent higher to $0.99825, after sliding to a 20-year low of $0.99005 on Tuesday.
The single currency has been hurt by growth concerns as the region faces an energy crisis, with investors on edge before Russia halts gas supplies through the main Nord Stream 1 pipeline for three days from Wednesday for unscheduled maintenance.
Sterling gained 0.17 percent to $1.18105, after dipping to the lowest since March 2020 on Tuesday at $1.1718.
The Australian dollar gained 0.19 percent to $0.6920, up from a more than one-month low of $0.6856 earlier in the week.
New Zealand's kiwi lagged its Antipodean peer with a 0.06 percent rise to $0.6194, hampered by data showing a decline in retail sales. It was at a one-month low of $0.6157 on Monday.
