Dollar holds tight as investors at Powell wait for catalysts by Reuters

By Stanley White

TOKYO (Reuters) – The dollar rose against major currencies on Monday as traders looked to the Federal Reserve’s annual Jackson Hole retreat for guidance on the outlook for U.S. monetary policy.

Sentiment for the greenback has improved somewhat due to supportive data on business activity and home sales outlets, but there are still concerns that additional monetary clearance may be needed to keep economic growth on track.

Traders in the yuan, and across broader financial markets, are also looking nervously at Sino-American ties, as the broad diplomatic dispute with President Donald Trump with China has no signs of diminishing.

“There could be a short-term bounce in the dollar, especially against the euro,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

“In the long run, the dollar will begin to decline again because the Fed has been obliged to aggressively depreciate for quite some time.”

Against the euro (), the dollar held firmly at $ 1.1804, holding on to gains made last week.

The British pound bought 1.3101 $ and traded at 90.11 pence per euro ().

The greenback gained 0.9116 Swiss francs , maintaining a 0.5% profit from Friday.

The dollar did not change much at 105.84 yen , who showed no reaction to a domestic media report that Japanese Prime Minister Shinzo Abe will visit the hospital on Monday amid speculation about his health.

Federal President Jerome Powell will discuss monetary policy on Thursday at the opening day of the Kansas City Fed’s annual symposium.

This year, the meeting will be held online, and not at the Jackson Hole Hunting and Fishing Resort in Wyoming due to the coronavirus pandemic.

The quantitative easing that the Fed has deployed so far has flooded financial markets with too much liquidity and waited for the dollar.

Last week, the against a rate of six major currencies fell to the lowest in more than two years. It was last traded at 93,197, not much changed from Friday.

The world’s policymakers have unleashed an unusual wave of monetary demand and fiscal support to offset the economic downturn caused by the pandemic.

However, many countries are now struggling with a second wave of infections, which could further delay a full-fledged economic recovery.

Net short positions in the dollar fell from a more than nine-year high a week earlier, according to calculations by Reuters and US Commodity Futures Trading Commission data released on Friday, suggesting that the decline of the greenback could begin to slow .

The speculative community has been short of the US dollar since mid-March.

Elsewhere in currency, the Australian dollar was not much changed at $ 0.7161 while the New Zealand dollar traded at $ 0.6639.