August 22, 2019 / 7:18 PM / 5 months ago

FOREX-Dollar declines as markets uncertain about Powell's speech in Jackson Hole

    * Markets expect Fed's Powell to clarify Fed minutes
    * Fed's Powell could also push back against rate cut view-analyst
    * Euro PMIs better than expected, but euro unable to benefit
    * Graphic: World FX rates in 2019

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Aug 22 (Reuters) - The dollar slipped on Thursday, but moved within narrow ranges, as
investors awaited a possible announcement or statement from the Federal Reserve at this week's Jackson
Hole, Wyoming event to address the worsening global economic outlook.
    Market participants said the Fed could announce a stimulus measure, or re-affirm the U.S. central
bank's easing stance, a scenario viewed as negative for the dollar.
    Fed Chairman Jerome Powell will speak on Friday and some say he may clarify the Fed minutes released
on Wednesday and deliver a dovish speech that would soothe market worries about the prospect of recession.
    But Powell could also push back against expectations of aggressive U.S. interest rate cuts, especially
after two Fed officials said they saw no need for easing at this time.
    Kansas City Fed President Esther George and Philadelphia Fed President Patrick Harker said on Thursday
the U.S. central bank currently does not need to deliver more stimulus to the economy after it cut rates
for the first time in more than a decade last month.
    "There is a risk that Powell, whose comments were laced with optimism after the last FOMC meeting, may
downplay chances of a rate cut even though the market is fully pricing it next month," said Kathy Lien,
managing director of FX strategy, at BK Asset Management in New York.
    "That kind of ambiguity is kind of the reason why we're not seeing major upticks in trading ranges in
the currency market."
    The Fed's latest minutes confirmed a growing view U.S. policymakers are reluctant to launch a major
rate-cutting cycle in the coming months, describing the July easing as a mid-cycle adjustment.
    Fed policymakers were divided over whether to reduce rates but united in wanting to signal they were
set on more cuts, minutes of the meeting showed.
    Edward Moya, senior market analyst at OANDA in New York thinks Jackson Hole will provide an
opportunity for the Fed to correct what he believes is a "communication mistake" in the minutes.
    "With the rest of the world going negative in interest rates, the risk is for that scenario to happen
in the U.S.," Moya said. "And if we don't see the Fed become a little more aggressive through no fault of
the U.S. economy...they could see more pressure to deliver rate cuts."
    In afternoon trading, the dollar slipped 0.2% against a basket of major currencies to 98.148. 
    The greenback also fell 0.2% against the yen to 106.41 yen, not far from last week's
eight-month low around 105.05.
    The euro, meanwhile, was little changed against the dollar, at $1.1086 amid an uptick in euro zone
business growth.
    Euro zone business growth picked up in August, as services expanded and manufacturing contracted at a
slower pace. But trade war fears knocked future expectations to their weakest in over six years, a survey
    Currency bid prices at 3:03 PM (1903 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1085        $1.1083     +0.02%         -3.35%      +1.1112     +1.1064
 Dollar/Yen       JPY=        106.4100       106.6100    -0.19%         -3.49%      +106.6400   +106.2600
 Euro/Yen         EURJPY=     117.95         118.16      -0.18%         -6.55%      +118.2900   +117.7400
 Dollar/Swiss     CHF=        0.9834         0.9823      +0.11%         +0.20%      +0.9844     +0.9815
 Sterling/Dollar  GBP=        1.2256         1.2126      +1.07%         -3.93%      +1.2271     +1.2109
 Dollar/Canadian  CAD=        1.3296         1.3289      +0.05%         -2.50%      +1.3315     +1.3275
 Australian/Doll  AUD=        0.6758         0.6780      -0.32%         -4.13%      +0.6787     +0.6752
 Euro/Swiss       EURCHF=     1.0901         1.0888      +0.12%         -3.14%      +1.0919     +1.0876
 Euro/Sterling    EURGBP=     0.9042         0.9138      -1.05%         +0.65%      +0.9157     +0.9029
 NZ               NZD=        0.6367         0.6402      -0.55%         -5.21%      +0.6407     +0.6362
 Dollar/Norway    NOK=        8.9727         8.9442      +0.32%         +3.87%      +8.9991     +8.9372
 Euro/Norway      EURNOK=     9.9485         9.9123      +0.37%         +0.43%      +9.9659     +9.9145
 Dollar/Sweden    SEK=        9.6685         9.6230      +0.46%         +7.86%      +9.6898     +9.5967
 Euro/Sweden      EURSEK=     10.7185        10.6695     +0.46%         +4.43%      +10.7323    +10.6568
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio and Chizu Nomiyama)
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