USD Aiming for Pristine Peak as Fed Sustains Their Decision

The US Dollar is steadying near record highs in several currency pairs as the dust settles after last week’s Jackson Hole symposium.

Overnight, Neel Kashakari, the president of the Federal Reserve of Minneapolis, said that markets misunderstood the Fed’s determination to get inflation back to 2% after their July Federal Open Market Committee meeting. He said he was “happy to see how Chair Powell’s Jackson Hole speech was received.” Stock markets are much lower.

As stated and expected, Fed rate hikes are set to commence in September, with an acceleration in the Fed’s balance sheet runoff. The US$ 90 billion of Treasuries and mortgage-backed securities (MBS) will be allowed to mature, and the funds will not be re-invested each month from Friday.

The Yuan (CNY) has been fixed stronger, exceeding market expectations, Peoples Bank of China (PBOC) for the fifth day in a row today at 6.8802. The mainland CSI 300 and Hong Kong’s Hang Seng indices are lower, down around -0.90% and -0.50%, respectively.

Earlier today, Australia’s ASX and Japan’s Nikkei 225 bourses recovered some of Monday’s losses. Australia saw disappointing building approvals data, which slipped by -17.2% month-on-month in July. Japanese jobs numbers for the same month were in line, with about 2.6% jobless.

As Germany announced that its gas storage filling target of 80% is two months ahead of schedule, as reserves are now at 79.4%, European natural prices have eased.

Overnight, UK Chancellor of the Exchequer Nadhim Zahawi made comments of the need to do more to help households deal with sky rocketing power bills. Pound Sterling continues to languish near two-year lows.