The U.S. dollar edged lower in early European trading Wednesday, giving back some of the previous session’s gains, but activity is limited as traders look for more monetary policy cues from speeches by a number of central bankers, including Fed Chair Jerome Powell.
As of 03:20 ET (07:20 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 105.382, having rebounded from a near two-month low of 104.84 earlier in the week.
Powell steps up again
The dollar suffered a sharp sell-off last week on growing confidence that the Federal Reserve had ended its rate-hiking cycle, but there has been some consolidation this week after a series of Fed speakers warned against complacency.
“A reduction in the federal funds rate is not something that is likely to happen in the near term,” said Patrick Harker, president of the Federal Reserve Bank of Philadelphia, on Wednesday.
Trading is likely to be subdued on Thursday, however, as Fed chief Jerome Powell is scheduled to speak again on Thursday after steering clear of major monetary policy issues at an event on Wednesday.
“Fedspeak will remain the central theme today and likely for the rest of the week given a quiet US data calendar,” analysts at ING said in a note.
Europe also looking to central bank speakers
It’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 light 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 was also largely unchanged at 1.2284, after hitting a seven-week high above 1.24 earlier in the week.
Chinese disinflation weighs on Yuan
In Asia, USD/CNY rose 0.1% to 7.2856 after Chinese government data showed that both consumer and producer inflation fell in October.
The readings showed China slipped into disinflation for the second time this year as repeated stimulus measures from Beijing failed to meaningfully support spending.
USD/JPY fell 0.1% to 150.93, retreating from the 151 level that was briefly breached last week following dovish signals from the Bank of Japan.
Traders remain wary of potential government intervention in the currency markets, with the currency now trading near levels last seen at the start of the lost decade in the early 1990s.
AUD/USD was up 0.2% at 0.6414, with the Aussie dollar steadying after dovish signals from the Reserve Bank of Australia triggered steep losses this week.
