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Business News/ Market / Stock-market-news/  Dollar gauge at two-week low before US inflation data, Jackson Hole
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Dollar gauge at two-week low before US inflation data, Jackson Hole

The dollar fell to a two-week low ahead of data forecast to show inflation slowed and before central bankers meet in Jackson Hole

Futures traders trimmed bullish bets on the US currency against the yen by the most since April before Federal Reserve Chair Janet Yellen is scheduled to deliver a speech on 22 August. Photo: BloombergPremium
Futures traders trimmed bullish bets on the US currency against the yen by the most since April before Federal Reserve Chair Janet Yellen is scheduled to deliver a speech on 22 August. Photo: Bloomberg

Tokyo: The dollar fell to a two-week low against its major trading partners ahead of data forecast to show inflation slowed and before central bankers meet at an annual conference in Jackson Hole, Wyoming.

Futures traders trimmed bullish bets on the US currency against the yen by the most since April before Federal Reserve Chair Janet Yellen is scheduled to deliver a speech on 22 August. The pound rose the most in two weeks versus the dollar as investors await meeting minutes from the Bank of England (BOE) this week for clues on when it will raise record-low interest rates.

‘If annual inflation rises around consensus at 2%, it justifies the Fed retaining a low interest-rate policy," said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd, which provides margin-trading services. “That’ll keep US yields depressed and put a lid on dollar strength. It’s hard to see Yellen taking a hawkish tone in Jackson Hole."

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, fell 0.1% to 1,018.95 as of 6:48am in London from 15 August, after earlier touching 1,018.70, the lowest level since 1 August. The gauge declined 0.2% last week, its first weekly drop in a month.

The US currency traded at ¥102.33 from ¥102.36 in New York and fetched $1.3393 per euro from $1.3401 on 15 August, when it weakened 0.3%. The yen gained 0.1% to 137.04 per euro.

Benchmark US 10-year note yields slid to as low as 2.3% last week, the least since June 2013.

Slowing inflation

US consumer prices increased 2% in July from a year ago versus 2.1% the previous month, according to the median estimate of economists surveyed by Bloomberg News before the labour department data on Tuesday.

The Fed reduced monthly bond-purchases by $10 billion for sixth consecutive meeting last month to $25 billion. The central bank has kept the benchmark interest rate at a record zero to 0.25% since December 2008. Futures traders see a greater than 70% chance the Fed will raise its benchmark interest rate to at least 0.5% by October next year.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain—so-called net shorts—was 81,097 on 12 August, compared with net shorts of 95,399 a week earlier, the biggest decrease since 15 April, according to data from the Washington-based Commodity Futures Trading Commission.

The pound rose before the release of minutes on 20 August of the BOE’s 7 August meeting, when the Monetary Policy Committee kept its benchmark rate at 0.5%.

Sterling gained 0.2% to $1.6733 from last week. Bloomberg

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Published: 18 Aug 2014, 01:13 PM IST
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