Dollar braces for busy week of geopolitics and Fed | Money News

By Rae Wee

SINGAPORE (Reuters) -The greenback dithered on Monday forward of a key assembly between U.S. President Donald Trump and his Ukrainian counterpart Volodymyr Zelenskiy, whereas traders additionally regarded forward to the Federal Reserve’s Jackson Hole symposium for more coverage clues.

Currency strikes had been largely subdued within the early Asia session, although the greenback steadied after final week’s fall as merchants additional pared back bets of a jumbo Fed cut subsequent month.

The euro was little modified at $1.1705, whereas sterling edged up 0.07% to $1.3557.

Against a basket of currencies, the greenback superior barely to 97.85, after shedding 0.4% final week.

Markets are actually pricing in an 84% probability the Fed would ease charges by a quarter level subsequent month, down from 98% final week, after a raft of information together with a bounce in U.S. wholesale costs final month and a strong increase in July’s retail gross sales figures dimmed the prospect of an outsized 50-basis-point cut.

“While the data don’t all point in the same direction, the U.S. economy looks to be in okay shape in the third quarter,” mentioned Bill Adams, chief economist at Comerica Bank.

“The Fed is likely to cut interest rates by year-end, either in September, when markets now price in a cut, or a few months later, when Comerica forecasts a cut.”

The primary occasion for traders on Monday is a assembly between Trump and Zelenskiy, who will likely be joined by some European leaders, as Washington presses Ukraine to simply accept a fast peace deal to finish Europe’s deadliest conflict in 80 years.

Trump is leaning on Zelenskiy to strike an settlement after he met Kremlin chief Vladimir Putin in Alaska and emerged more aligned with Moscow on in search of a peace deal as an alternative of a ceasefire first.

Also key for markets this week would be the Kansas City Federal Reserve’s August 21-23 Jackson Hole symposium, the place Fed Chair Jerome Powell is because of communicate on the financial outlook and the central bank’s coverage framework.

“I think (Powell) will also talk about the current economic conditions in the U.S., and that will be more policy relevant, that will be more interesting to markets,” mentioned Joseph Capurso, head of worldwide and sustainable economics at Commonwealth Bank of Australia.

“Given market pricing is very high for a rate cut in September, I think the risk is that Powell is hawkish, or is perceived to be hawkish, if he gives a balanced view of the U.S. economy.”

In different currencies, the greenback rose 0.11% in opposition to the yen to 147.34, after falling roughly 0.4% final week.

Japan’s authorities on Friday brushed apart uncommon and specific feedback from U.S. Treasury Secretary Scott Bessent who mentioned the Bank of Japan was “behind the curve” on coverage, which gave the impression to be geared toward pressuring the nation’s central bank into raising rates of interest.