Dollar Weakens as Investors Await Powell Speech


Summary: The U.S. dollar started the week on a weak note as investors monitored developments in the Middle East and prepared for speeches by central bank officials, including Fed Chair Powell. The Japanese yen remained close to the intervention zone, raising concerns of potential intervention by Japanese authorities. Geopolitical tensions and the conflict in the Middle East continue to be key factors affecting market sentiment. Fed Chairman Powell’s upcoming speech will be closely watched by investors.

The U.S. dollar opened the week on a downward trend as investors focused on developments in the Middle East and eagerly awaited speeches from central bank officials. The highlight of the week will be the speech by Federal Reserve Chair Jerome Powell. His remarks will provide insights into the monetary policy outlook.

The Japanese yen remained near the key level of 150 per dollar, prompting concerns about potential intervention by Japanese authorities. Despite recent weakness, the yen is still perceived as a safe haven asset and is benefiting from increased demand due to the conflict in the Middle East.

In other news, the Israeli shekel fell to four per U.S. dollar, the lowest level since 2015, due to concerns over the ongoing conflict between Israel and the Palestinian militant group Hamas. Furthermore, geopolitical tensions and the potential spread of the conflict to other parts of the Middle East have been major factors influencing market dynamics.

Investors will be closely monitoring the speech by Fed Chair Powell, as well as other speeches by regional bank heads throughout the week. These speeches will provide valuable insights into the future direction of monetary policy. The Federal Reserve officials will enter a blackout period before the upcoming Fed meeting on October 31 to November 1.

The dollar index, which measures the performance of the U.S. currency against a basket of six major currencies, experienced a slight decline. Market experts suggest that the dollar may remain range-bound for now, as factors such as expectations of prolonged low interest rates, U.S. economic resilience, and geopolitical uncertainties impact its performance.

In terms of other major currencies, the euro and sterling showed minor declines against the dollar. The Australian dollar, on the other hand, saw a modest increase. The Reserve Bank of Australia, in its recent policy meeting, considered raising interest rates but deemed it unnecessary due to a lack of significant new information. Meanwhile, the New Zealand dollar experienced a decline following the release of data indicating a two-year low in consumer inflation, leading to reduced expectations of a cash rate hike by the central bank in November.

Tags: U.S. dollar, investors, Middle East, central bank officials, Powell speech, Japanese yen, intervention, geopolitical tension, monetary policy, geopolitical conflict