Investing.com – The U.S. dollar retreated in early European trade Tuesday as risk sentiment received a boost from strong tech-led gains on Wall Street, but trading ranges remained tight ahead of the Federal Reserve’s Jackson Hole symposium at the end of the week.
At 03:20 ET (07:20 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 103.042, but remained not far from Friday’s high of 103.68, a level not seen since June 12.
Powell’s speech at Jackson Hole seen key
The resilience of the tech-heavy index overnight in the face of bond yields’ surge to new multi-year highs has provided a boost for risk sentiment Tuesday, to the detriment of the safe-haven dollar.
However, losses are minor as traders awaited a potentially crucial speech from Federal Reserve Chair at the later this week.
The market will be focusing on whether the Fed head believes more policy tightening will be needed to bring down or if enough progress has been made to keep rates on hold.
“The bottom line, however, is that it looks too early for the Fed to sound the all-clear on inflation and the dollar probably holds its gains,” said analysts at ING, in a note.
Lagarde also set to speak
rose 0.2% to 1.0917, with European Central Bank President also scheduled to speak at Jackson Hole on Friday, and her comments will be carefully parsed for clues on the central bank’s next move in September.
has started to retreat in the eurozone but remains well above the central bank’s 2% target, while the region’s economy has broadly stagnated for the past three quarters, suggesting barely positive growth in 2023.
The ECB expects the eurozone economy to grow by 0.9% this year and 1.5% next year, but these forecasts could be subject to downward revisions.
Sterling rises after net borrowing figures
rose 0.2% to 1.2783, helped by data showing that Britain borrowed less than expected in July, increasing the options for Chancellor Jeremy Hunt to boost the country’s stagnating economy.
The country’s public sector net borrowing rose £3.48 billion in July, considerably below the £17.11B the prior month and the £17.03B expected.
Elsewhere, fell 0.2% to 145.91, with the yen recovering from a near 10-month low to the dollar with traders wary of intervention after levels around 146 spurred the buying by Japanese officials last September.
edged lower to 7.2854, with the yuan recovering from a nine-month low after a series of strong daily midpoint fixes by the People’s Bank of China.
The currency was also seen benefiting from dollar sales by major Chinese state-owned banks, as the government seeks to stem further weakness in the yuan.
