US Dollar Accelerates on Hawkish Fedspeak ahead of Powell’s Jackson Hole Speech

Pound (GBP) Subdued as Economic Concerns Mount 

The Pound (GBP) was placed on the defensive yesterday, amidst growing concerns over the UK’s economic outlook. 

This came on the back of a survey from the from the Confederation of British Industry (CBI). The survey highlighted concerns over labour shortages in consumer-facing industry, which coupled with ongoing supply chain issues has raised fears about the strength of the UK’s economic recovery. 

Looking ahead, the Pound may remain on the back foot going into the weekend, as the concerns are likely to be compounded by the continued rise of coronavirus cases in the UK. 

Euro (EUR) Dented by USD Strength 

The Euro (EUR) ticked lower on Thursday, as the single currency’s strong negative correlation with the US Dollar (USD) saw it falter as the latter rallied. 

Also limiting the appeal of the Euro was the publication of the minutes from the European Central Bank’s (ECB) July policy meeting, as they reiterated the bank’s current dovish bias. 

In the absence of any notable EUR data releases, the Euro may continue to be driven by its relationship with the US Dollar today. Will an uneventful Jackson Hole summit help to propel EUR exchange rates higher? 

US Dollar (USD) Firms on Hawkish Fed Comments  

The US Dollar (USD) trended higher during yesterday’s trading session, in response to comments from Federal Reserve policymaker James Bullard. 

Speaking to CNBC on Thursday, Bullard suggested he is ‘sceptical inflation will moderate in 2022’ and reiterated his call for the Fed to finish tapering its bond purchases by the end of the first quarter of next year. 

However, these gains were tempered somewhat by some underwhelming US data, as the latest US GDP estimate came in below expectations. 

Looking ahead, USD investors will look to Fed Chair Jerome Powell’s key speech at the Jackson Hole symposium for fresh opportunities to trade this afternoon. Will Powell make any mention of the Fed’s tapering plans? 

Canadian Dollar (CAD) Dented by Retreating Oil Prices 

The Canadian Dollar (CAD) trended lower on Thursday, as a modest pullback in oil prices undermined the appeal of the risk-sensitive currency. 

Australian Dollar (AUD) Strengthens despite Underwhelming Data 

The Australian Dollar (AUD) strengthened overnight on Thursday as a prevailing risk-on mood helped to offset the publication of Australia’s latest retail sales figures, after July’s releases reported sales growth plunged to a seven-month low. 

New Zealand Dollar (NZD) Buoyed by Upbeat Trade 

The New Zealand Dollar (NZD) also firmed in overnight trade, with the risk-sensitive ‘Kiwi’ finding support amidst an improving market mood.