Currency News and Forecast: US Dollar Fluctuates as Fed Changes Inflation Targets, GBP/USD Hits Eight-Month High

Pound to US Dollar Touches Eight-Month High, EUR/USD Strengthens as Powell Changes Fed Inflation Targets

Federal Reserve chair Jerome Powell’s speech at the Jackson Hole symposium drove currency market movement yesterday. USD fluctuated before plunging today as the Pound to US Dollar exchange rate touched an eight-month high.

The US Dollar rallied following Jerome Powell’s speech as the Fed chair hinted at more stimulus which boosted treasury yields. However, the US Dollar selloff resumed today after USD’s brief burst.

Meanwhile, coronavirus concerns in Europe left the Euro subdued on Thursday as the WHO warned cases are rising again. The Euro to US Dollar exchange rate is also strengthening this morning as EUR/USD pushes toward a 27-month high.

Pound (GBP) Steady ahead of Bailey’s Speech, Pound to US Dollar Rises

The Pound (GBP) trended in a narrow range through yesterday’s trading session, as concerns over rising domestic coronavirus cases and lingering Brexit jitters tempered Sterling demand.

Coming up, GBP investors will be eager to hear from Andrew Bailey this afternoon as the Bank of England (BoE) Governor delivers his keynote speech at the Jackson Hole symposium.

This could stoke some volatility into the Pound if Bailey touches on the possibility of the BoE implementing negative interest rates.

Ahead of Bailey’s speech, the Pound to US Dollar exchange rate continued to push higher on the USD selloff.

At the same time, the Pound to Euro exchange rate remains steady against the backdrop of USD weakness.


Euro (EUR) Sidelined by Coronavirus Concerns

The Euro (EUR) struggled to find momentum on Thursday amidst ongoing concerns over Europe’s coronavirus resurgence. This led to the Pound to Euro exchange rate rising slightly ahead of the weekend.

This was highlighted by comments from the World Health Organisation’s (WTO) European Chief Dr Hans Kluge, who warned that the coronavirus is a ‘tornado with a long tail’ and that cases are on the rise again in 32 parts of Europe.

However, the Euro has benefited from US Dollar weakness this morning as the EUR/USD exchange rate approaches a 27-month high.

In focus for EUR investors today will be the publication of the Eurozone’s latest economic sentiment index. Will the uptrend in sentiment have continued this month or will Europe’s coronavirus resurgence have soured the mood?


US Dollar (USD) Climbs, then Plunges Following Powell Speech

The US Dollar (USD) struck higher during yesterday’s trading session after the Federal Reserve chair, Jerome Powell, signalled that the Fed would allow inflation to run higher going forward.

While a knee-jerk reaction sent the ‘Greenback’ plunging against most of its peers, USD exchange rates were quick to recover as the prospect of more monetary easing bolstered US treasury yields.

However, this recovery was short-lived as USD exchange rates plummeted this morning, with the Euro and Pound to US Dollar exchange rates soaring to new highs.

Turning to today’s session, the US Dollar could stem some of the losses with the latest US personal spending figures. If the data shows that household spending continued to expand last month despite rising coronavirus cases, USD lessen its losses slightly.


Canadian Dollar (CAD) Steady on Robust Oil Prices

The Canadian Dollar (CAD) remained steady through Thursday’s trading session as oil prices continued to hold at multi-month highs, amid the prospect of Hurricane Laura causing major disruption to US crude production.

Looking ahead, the publication of Canada’s latest GDP figures will be centre stage today. A record contraction of growth in the second quarter looks inevitable, but how will this impact the ‘Loonie’?


Australian Dollar (AUD) Strengthens as Risk Appeal Rises

The Australian Dollar (AUD) ticked higher overnight on Thursday, with the sell-off of the US Dollar (USD) triggered by news that Japanese Prime Minister Shinzo Abe is stepping down appearing to boost the appeal of the high-yield ‘Aussie’.


New Zealand Dollar (NZD) Accelerates despite RBNZ Speculation

The New Zealand Dollar (NZD) also ticked higher in overnight trade in spite of growing speculation that the Reserve Bank of New Zealand (RBNZ) could implement negative interest rates within the year.

Matthew Andrews

Contact Matthew Andrews