The U.S. dollar index rebounds from two-month lows. Powell is expected to add ammunition to U.S. dollar bulls. Investing.com

Investing.com – In European morning trading on Wednesday (8th), the U.S. dollar edged higher before Federal Reserve Chairman Powell delivered an important speech.

As of 16:29 Beijing time (04:29 a.m. Eastern Time), the U.S. dollar rose 0.18% against six trade-weighted major currencies to 105.565; it rose 0.18% to 105.74. Compared with the two trade-weighted currencies hit earlier this week, It rebounded from the monthly low of 104.84.

The benchmark U.S. bond yield was at 4.926%, at 4.593%.

Dollar climbs ahead of Powell’s speech

In recent days, many Federal Reserve officials have opened the door to further raising interest rates to combat inflation, and then the U.S. dollar index began to reverse last week’s sharp decline.

Last week, the dollar suffered its biggest weekly loss since mid-July after the Federal Reserve sent a dovish signal on the possibility of further interest rate hikes this year and the U.S. monthly employment report was weak.

Traders are currently awaiting a speech from Federal Reserve Chairman Jerome Powell later in the day to assess the central bank’s future policy path.

“Financial conditions tightened in mid-October, prompting comments such as ‘term premia are tightening,'” ING analysts said in a note. “However, financial conditions have completely reversed the tightening seen in October, so the Fed may want to reemphasize the risks of further rate hikes.”

Euro lower, focus on euro zone retail sales later

{{1|EUR/USD} fell 0.19% to 1.0678, with the Eurozone September release due later. Analysts expect retail sales to fall 3.1% year-on-year as consumers continue to struggle.

In addition, data released on Tuesday (7th) showed that Germany’s industrial output fell more than expected in September, further indicating that the euro zone’s growth prospects are increasingly bleak.

However, the International Monetary Fund (IMF) said earlier on Wednesday that the European Central Bank should keep its key deposit rate at a record high of nearly 4% throughout next year to remove price pressures.

“The narrative for the euro remains weak and EUR/USD will only rebound if the U.S. economy weakens enough to trigger a significant flattening of the U.S. yield curve, which is still far off.”

Meanwhile, it fell 0.25% to 1.2268, retreating further from the seven-week high of 1.2428 hit earlier this week.

The pound came under pressure after comments from Bank of England chief economist Huw Pill, who said expectations for interest rate cuts starting next summer looked reasonable.

Australian dollar rebounds slightly

rose 0.10% to 0.6442, rebounding slightly after falling 0.8% in the previous session, when the Australian dollar suffered its biggest one-day drop in a month, after downplaying its tightening bias, saying policy would depend more on future economic data .

It rose 0.22% to 150.68, still well above the 150 level. Traders are cautious and continue to wait and see whether the Japanese government will intervene in the currency market to boost the yen.

It fell 0.04% to 7.2759; it fell 0.01% to 7.2795. reported 2.679%. Investors need to pay close attention to the inflation data released on Thursday (9th).

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Compiler: Liu Chuan