The dollar index rallied on Thursday after taper-supportive comments from a relatively hawkish trio of Fed officials a day before a highly anticipated speech from Chair Jerome Powell, which markets will scrutinize for hints about the timing and intensity of stimulus reduction.
While Kansas City Fed president Esther George, Dallas Fed president Robert Kaplan and St.
Louis Fed president James Bullard all pressed for the start of U.S. asset tapering as the pace of the pandemic recovery and inflation pick up steam, none is among the roster of voting policymakers this year.
Still, they pushed the hawkish side of policy debate, which could leave any comments about reducing asset purchases made by Powell -- who has adhered to a view that rising inflation is a transitory post-pandemic economic effect -- sounding mild by comparison when he delivers his remarks to the Jackson Hole symposium.
EUR/USD dipped from its early U.S. high by 1.1775, heading toward the close down 0.17% at 1.1752.
USD/JPY backed away from the session’s trend high of 110.23, holding onto scant gains of 0.05% at 110.05.
Diverging U.S.-Japan policy paths could help boost USD/JPY back toward July 2 highs by 111.66.
GBP/USD reversed early risk-on flows, which had lifted the pound to daily cloud base resistance.
The pound weakened significantly after the Fed comments, falling 0.46% to 1.3695.
A close below 1.37 would target lower 30-day Bolli support by 1.3613.
AUD/USD was heading out of U.S. trade down 0.49% at 0.7240.
Broad USD gains on faster taper prospects stirred AUD long position reduction ahead of Powell's Jackson Hole speech.
Treasury 10-year yields erased an earlier rise to trend highs, trading steady on the day at 1.34%.
Gold was flat, silver down 1.6%, while oil and copper dipped slightly as fears of the removal of accommodation and ultimately rate hikes may slow global growth.
Bitcoin was ending the day near session lows at $46.8k.
BTC once again ran into significant resistance near $50k.
After six consecutive failed attempts to rally above $50k, traders may capitulate and test lower levels.
A break below the 200-DMA at $46k opens the way for a test of the 50% Fib of $29.3k-$50.6k rise at $39.9k.
For more click on FXBUZ