Dollar holds modest gains as Jackson Hole gathering gets under way


The U.S. dollar held modest gains against its main counterparts during the session on Thursday as a gathering of global central bankers in Jackson Hole, Wyo., got under way, potentially providing clues about the direction of global financial policy. A gauge of the dollar against a half-dozen rivals, the ICE U.S. Dollar Index DXY, +0.05% rose 0.1% at 93.2260, while a broader measure of the buck’s strength, the WSJ Dollar Index BUXX, +0.06% was more or less unchanged at 86.06 on Thursday morning.

The Jackson Hole symposium hosted by the Kansas City Federal Reserve Bank, titled “Fostering a Dynamic Global Economy,” kicks off on Thursday and runs through Saturday, with European Central Bank President Mario Draghi and Federal Reserve boss Janet Yellen set to speak Friday.

Read: Here’s what investors will be watching when Draghi, Yellen speak at Jackson Hole

Traders will be watching for any signals on the path for policy as Draghi contends with signs of improvement in the eurozone economy and Yellen aims to normalize the interest-rate regime in the U.S., though not many expect the speeches to include much in terms of new policy stances.

See: How one central bank cowboy at Jackson hole has fallen behind—and may be spurred to act

Both central bankers have been bedeviled by an intractable bout of sluggish inflation that has refused to pick up steam, running below targets of roughly 2%, even as employment and other economic gauges around the world regain a semblance of vibrancy. Both Yellen and Draghi are slated to deliver speeches that could set the tone for the remaining four months of 2017.

Market participants expect Draghi to be neutral to hawkish if he directly comments on ECB monetary policy. But I think this is wishful thinking and see it as quite likely that he will disappoint,” Alejandro Zambrano, chief market analyst at brokerage Amana Capital, said, adding that hawkish comments would likely fuel further gains of the euro, making eurozone inflation targets harder to reach in the medium term. With muted inflation in mind, ECB tapering might take longer than hoped for, Zambrano said.

Ahead of those events, the euro EURUSD, +0.0254% weakened slightly against the dollar. One euro bought $1.1803 on Thursday, clawing back losses from an intraday low of $1.1784, and compared with $1.1808 late Thursday in New York, when the shared currency got a bounce after an upbeat report on manufacturing activity in the region.

The pound GBPUSD, -0.0313% meanwhile, gained some ground after weakening against greenback in the previous session. The British currency was buying $1.2814, compared with $1.2799 late Wednesday.

Steve Barrow, head of G-10 currency strategy at Standard Bank, described the current trading environment for foreign exchange as a “mess.”

Our indicators have started to become both more mixed and weaker; in short a bit of a mess. This suggests that we should be cautious about opening new positions at this stage,” he wrote in a Thursday research note.

In North American trade, the Mexican peso was little changed and Canada’s dollar was higher against the buck after the pair were rattled in Wednesday trade by President Donald Trump’s comments during a Phoenix speech, where he threatened a government shutdown if he couldn’t obtain funding for a U.S.-Mexico border wall. He also suggested that a key trade pact, the North American Free Trade Agreement, would likely be scrapped.

Read: Trump ‘shutdown’ threat rattles stock market

The buck bought 17.6890 pesos USDMXN, -0.0492% compared with 17.6855 pesos in the prior session. Meanwhile, the U.S. dollar USDCAD, -0.1992% fetched C$1.2539, versus C$1.2553 on Wednesday.

In Asia, the dollar strengthened against the Japanese yen USDJPY, +0.26% which tends to rise against rivals in times of perceived uncertainty in the market, was at ¥109.16, compared with ¥109.04 late Wednesday in New York.

On the economic calendar, weekly initial jobless claims beat expectations at 234,000, compared with 238,000 expected. They rose from 232,000 before. Separately, existing-home sales ran at a seasonally adjusted annual rate of 5.44 million, the National Association of Realtors said Thursday. That was down 1.3% reduced from its June pace. While July’s pace was 2.1% higher than a year ago, it was the lowest since last August.