Dollar steadies with Fed chief Powell set to speak again

The U.S. dollar edged lower in early European trade Wednesday, handing back some of the previous session’s gains, but activity is limited as traders look for more monetary policy cues from speeches by a series of central bankers, including Fed Chair Jerome Powell.

At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 0.1% to 105.382, after rebounding from the near two-month low of 104.84 earlier in the week.

Powell steps up again
The dollar suffered a sharp selloff last week on rising confidence that the Federal Reserve has ended its interest rate-hiking cycle, but there has been a degree of consolidation this week after a number of Fed speakers warned against complacency.

“A decrease in the policy rate is not something that is likely to happen in the short term,” said U.S. Federal Reserve Bank of Philadelphia President Patrick Harker on Wednesday.

However, trading is likely to be muted Thursday as Fed chief Jerome Powell is scheduled to speak once more Thursday, having steered clear of major monetary policy topics at an event on Wednesday.

“Fedspeak will remain the central theme today, and probably for the rest of the week given a quiet U.S. data calendar,” said analysts at ING, in a note.

Europe also looks to central bank speakers
There’s a similar story in Europe, with European Central Bank chief economist Philip Lane and Bank of England Chief Economist Huw Pill set to speak at separate events, with any comments likely to influence the market given a bare economic calendar.

EUR/USD traded flat at 1.0707, stabilizing after weakness in the previous session as eurozone retail sales fell 0.3% month-on-month in September.

GBP/USD also traded largely unchanged at 1.2284, having earlier in the week hit a seven-week top above 1.24.

Chinese disinflation weighs on the yuan
In Asia, USD/CNY rose 0.1% to 7.2856, after Chinese government data showed that both consumer and producer inflation shrank in October.

The readings showed that China entered disinflation for the second time this year, as repeated stimulus measures from Beijing failed to meaningfully prop up spending.

USD/JPY fell 0.1% to 150.93, retreating from the 151 level, which was briefly breached last week following dovish signals from the Bank of Japan.

Traders remain on guard over any potential government intervention in foreign exchange markets, with the currency now trading close to levels last seen during the onset of the lost decade in the early 1990s.

AUD/USD rose 0.2% to 0.6414, with the Aussie dollar steadying after dovish signals from the Reserve Bank of Australia triggered steep losses this week.