FX Update: The New Zealand dollar outperformed and China's yuan weakened
FX Update: The New Zealand dollar outperformed and China's yuan weakened, while the U.S. buck traded modestly firmer against most currencies as market participants anticipate Fed Chair Powell's address at the Jackson Hole Symposium later today. Regarding Powell, market participants are evidently not overly hopeful he will signal a clear and strong commitment to sustained rate cuts following hawkish-leaving remarks by Fed members George and Harker yesterday, and the not-so-dovish FOMC minutes from the day before. The narrow trade-weighted USD index (DXY) rose 0.2%, to 98.35, which is near the recent three-week high at 98.45, while EUR-USD printed a three-week low at 1.1160. USD-JPY nudged higher and matched the five-day high seen on Wednesday at 106.65. Japanese CPI held at a two-year low of 0.5% y/y in July, as expected, remaining well off the BoJ's 2.0% target. As for the Kiwi dollar, the currency popped higher at the prompt of RBNZ-speak, with Governor Orr saying that quantitative easing is "far from our central scenario," while arguing that the recent 50 bp cut reduces the chances of having to do more farther down the road. NZD-USD rallied to the upper 0.6300s, extending a rebound from the fresh 10-year low that was seen yesterday at 0.6361. The yuan hit a low of 7.0992, the weakest since March 2008, while the PBoC set the reference rate at 7.0572, also the lowest since 2008 although firmer than markets had been anticipating.