The US dollar giant is still trading lower against most major currencies after disappointment with Federal Reserve (Fed) Chairman Jerome Powell failing to give a clear indication of the timeline for a reduction in bond purchases.
While Powell hinted the central bank may start reducing bond purchases by the end of the year, there is no clear indication of when it will be implemented and he also still sees a rise in inflation only temporary.
Powell’s more cautious remarks about the downgrade, suggest that the U.S. central bank is still in no hurry to make a stimulus withdrawal, especially with the risks from the emerging delta variant.
At the start of the European session, the dollar index traded around a two -week low of 92.70 against a basket of major currencies.
10 -year US bond yields continued to decline lower to 1.30%, giving the Japanese yen an opportunity to trade higher against the US dollar.
Commodity currencies, especially the Aussie and New Zealand dollars continued to trade stronger despite the slightly slower currency movement today. Meanwhile, the Canadian dollar was stable amid strengthening oil prices.
The focus of the Aussie dollar and kiwi this week is the publication of China’s manufacturing and services PMI data for tomorrow’s Asian session, and Australia’s economic growth report on Wednesday which is expected to show a decline in the second quarter.
Meanwhile, trading in the pound was somewhat limited today following the closure of banks in the UK in conjunction with the summer holidays. The pound sterling continued to trade steady around 1.37580 against the US dollar after posting a 0.4% gain at the end of last week.
