FOREX-Dollar Holds Near 4-Month High, Keeps Weekly Gains on Fed Bets

* Dollar on track for second consecutive week of earnings

* US producer prices highlight inflationary pressures

* Next Jackson Hole meeting focuses on Fed outlook

By Hideyuki Sano

TOKYO, Aug.13 (Reuters) – The dollar held steady on Friday, remaining near its four-month high against a basket of currencies as investors sought more clues from the Federal Reserve on its plans reduction in monetary stimulus.

The US currency was bolstered by data, released Thursday, showing US producer prices recorded their biggest annual increase in more than a decade in the 12 months through July.

Although consumer price data released a day earlier indicated that inflation could peak, wholesale price data underscored the strength of inflationary pressures, helping to suppress some of the inflation. Fed stimulus measures.

The dollar index held at 92.966, not far from Wednesday’s four-month high of 93.195, and maintaining a weekly gain of 0.2%.

The euro eased slightly to $ 1.1732, on track for a second straight week of losses and staying close to the four-month low of $ 1.1706 reached on Wednesday.

The dollar changed hands at 110.42 yen, slightly below the one-month high of 110.80 set on Wednesday.

The British pound was on the defensive at $ 1.3815 after hitting a two-week low at $ 1.3794 in the previous session, drawing little help from a slightly stronger than expected GDP estimate for June.

This week, several Fed officials spoke in favor of reducing bond purchases in the coming months, setting themselves apart from other large, more accommodating central banks such as the European Central Bank and the Bank of Japan.

While many market participants suspect Fed Chairman Jerome Powell of being more accommodating than some of the other board members, especially the more hawkish regional Fed chiefs, a reduction announcement from here the end of the year is considered a virtual certainty.

Weekly data from Thursday showed the number of Americans filing unemployment benefits claims fell again last week as the economic recovery from the COVID-19 pandemic continued, despite concerns over the Delta variant. virus.

“The focus is on jobs rather than inflation. While we still need to monitor the impact of the Delta variant, if we have strong payroll growth over the next few months, there should be a cut announcement from the Fed, ”Naoya said. Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

Some investors believe the Fed may signal cutback times as early as a central bankers meeting in Jackson Hole, Wyoming, August 26-28, although many others expect the Fed to take a slower approach.

“I think they still want to talk about it a little bit more, they still want to think about talking about it and talking about thinking about it to make us assimilate this idea, so that it doesn’t become news at all when they start talking about it. do, “said Christopher Smart, chief global strategist and director of the Barings Investment Institute in Boston.

“When they start doing it, it will be very small amounts. They want to make sure that they are not going to disrupt the markets, especially the mortgage markets where they have bought a lot of assets,” he said. added.

Falling oil prices put some pressure on commodity-linked currencies as the International Energy Agency (IEA) said the spread of the Delta variant of the coronavirus would slow the recovery in global demand for oil.

The Australian dollar stood at $ 0.7342, near an eight-month low of $ 0.72895 reached last month, while the Canadian dollar fell to C $ 1.2520 per US unit.

Elsewhere, bitcoin rose 1.1% to $ 44,913, from a three-month high of $ 46,787 on Wednesday and gave up most of its gains so far this week, while Ethereum also rose by 1.7% to $ 3,095.

(Reporting by Hideyuki Sano; Editing by Sam Holmes and Lincoln Feast.)

Comments are closed.