Powell’s dovishness depresses dollar, Ida keeps oil bid, cryptos

Here is what you need to know on Monday, August 30:

The dollar remains on the back foot after Fed Chair Powell refrained from signaling imminent tapering in a speech on Friday. Hurricane Ida hit Louisiana and knocked down gas and oil output. Covid headlines and European inflation reads are eyed. Cryptocurrencies and gold have stabilized. 

No rush to taper: Federal Reserve Chair Jerome Powell said that back in July, he had thought that the it would be warranted to reduce the bank’s $120 billion/month bond-buying scheme this year. However, since then while employment has made progress, he still sees inflation as transitory and the Delta virus variant poses risks.

Markets perceived that as a sign that the Fed refrains from a taper announcement in September. Powell also stressed that a decision to raise interest rates is separate from tapering. 

Federal Reserve Chair Powell: Make me a rate hawk, but not yet

The dollar dropped across the board in response to Powell’s highly anticipated Jackson Hole speech, which came after a long list of his colleagues had come out to support an imminent taper announcement. EUR/USD hit 1.18, GBP/USD recaptured 1.3750, commodity currencies bounced and gold jumped to $1,815.

The market mood remains cheerful on Monday and the focus now shifts to this week’s all-important jobs report. 

Powell Quick Analysis: Dove defeats the dollar, without a strong NFP, forget about tpaering

Powell Sent the Dollar Lower. Will the August jobs data bring it back?

Hurricane Ida has made landfall in Louisiana, knocking down nearly all crude oil and natural gas output. The storm’s winds are stronger than the infamous Katrina hurricane of 2005, prompting President Joe Biden to declare a national emergency. WTI Crude Oil is trading at around $68, at the high end of the current range. 

Afghanistan: Investors have brushed aside concerns related to the US evacuation plan from the war-torn country after temporarily dropping in response to Thursday’s deadly terror attack. Several countries have already concluded their missions ahead of the August 31 deadline. 

UK traders are enjoying a bank holiday, causing thinner trade in the European session. Preliminary German and Spanish inflation reads for August are on the docket. 

COVID-19 cases continue rising in the US, albeit at a slower pace, while they are stable in Europe and falling in South America. New Zealand and Australia have extended their restrictions as cases continue mounting, while a study from Israel showed booster shots help prevent hospitalizations. 

Cryptocurrencies have been edging lower, with Bitcoin hovering around $48,000, Ethereum at around $3,150 and ADA at around $2.80.