The U.S. dollar was under pressure late Friday on the prospects for trade talk progress between the U.S. and China.
The greenback attempted to regain some of Friday’s losses overnight but failed to make any significant gains. Still, the U.S. dollar index is near a one-year high as global risk has buoyed the greenback throughout the summer.
The domestic docket is light at the beginning of the week. In fact there is no data out until existing home sales cross the wires on Wednesday morning. Wednesday afternoon sees the release of the minutes from the last Fed meeting which is always of interest for currency traders. Durable goods are set for Friday morning. The biggest event for the greenback will come Friday morning when Fed Chairman Jay Powell addresses the economy and monetary policy at the annual symposium in Jackson Hole, WY. Market participants will look to see how the central banker views the current strength of the economy and risks to it including trade wars. In addition, Powell may also hint at thoughts behind the current strong dollar and the President’s aversion to it. For a Friday in late August, the speech is the most exciting event we can realistically hope for.
The EUR/USD popped higher on Friday on U.S./China news and after a report showed inflation was above the ECB’s target. But the common currency has been unable to establish any meaningful momentum and rally more than 1.0% off its 14-month lows reached last week.
The economic docket showed that Eurozone construction output rose 2.6% but had little effect on the currency.
The British pound is modestly lower on more Brexit uncertainty. EU Commissioner Moscovici said that it was not necessary to have a Brexit deal with the U.K., which was strange. But he also commented that “in theory” the U.K. referendum to leave the European Union could be reversed. Deal makers from both sides are rushing to come to an agreement by October to allow the two sides to ratify and implement changes ahead of the March “Brexit”.