In Asia on Wednesday morning, the dollar was riding high in the market, but it was still at its lowest level in over three weeks. With the latest U.S. employment data, which might give clues to the U.S. Federal Reserve’s asset reduction plan, expected on Friday, investors continued to keep their movements minimal.
The greenback has been on a downward trend since hitting a nine-and-a-half-month high of 93.734 on Aug. 20, as several Fed officials hinted asset reduction would not start anytime soon.
While Fed Chairman Jerome Powell stated at the Jackson Hole symposium last week that asset cutting might begin in 2021, he did not offer a specific timeline. Loretta Mester, the president of the Cleveland Federal Reserve, stated on Monday that she was not sure that recent inflation statistics met the central bank’s price stability aim.
The Conference Board (CB) consumer confidence index fell to 113.8 in June, which was the lowest in six-month, while the S&P/Case-Shiller 20 n.s.a. home price index composite rose a record 19.1 percent in June.
The AUD/USD exchange rate fell 0.01 percent to 0.7314. During the second quarter of 2021, Australia’s GDP increased 9.6% and 0.7 percent quarter on quarter. The NZD/USD exchange rate fell 0.06 percent to 0.7040.
Investors will have a close look towards the latest U.S. employment report, which includes non-farm payrolls, expected out on Friday since one of the Fed’s requirements for starting asset reduction is labor market improvement.
In a letter, National Australia Bank (OTC: NABZY), who heads the foreign exchange, Ray Attrill stated, “The dollar upswing is gone for the time being at least,” when Powell effectively distanced the argument over taper timing from any choices about higher rates.
Their Aug. 20 lows suggest “Positive price activity” connected to the dollars of Australia and New Zealand, stating “there is a creation of a base for currencies,” the note suggested.