Asian Forex Nearly Flat as Focus Shifts to Jackson Hole Central Bankers’ Symposium

The U.S. Dollar continued its two-sided price action with a rally on Wednesday as investors prepared for the central bankers’ symposium in Jackson Hole, Wyoming. They will be looking for clues as to the timing of the next Fed rate hike as they await Friday’s key address by Fed Chair Janet Yellen.

Traders are starving for new information this week under thin market conditions in most major currencies. So far the price action has been subdued, but multi-directional.

Coming into this week, investors were a little confused about the timing of the next rate hike because the Fed minutes released on August 17 and comments from a few high-ranking Fed officials gave conflicting views on when it could happen.

The minutes from the Fed’s July 26 -27 monetary policy meeting showed officials were divided over whether to raise rates soon, with some insisting that more economic data were needed before any tightening. However, recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley have raised some investors’ expectations that Yellen might also take a less cautious tone.

According to recent Fed Funds data, traders are currently putting the chances of a September rate hike at 21%, a December rate hike at 41.1% and a 25-basis point rate hike at 100% for September 2017. Nonetheless, the choppy, two-sided trade by the dollar against most major currencies this week indicates that investors are looking at Yellen for clarity.

In other news, the AUD/USD finished at .7607, down 0.0007 or -0.10% as investors reacted negatively to Australia’s Construction Work Done report for the June quarter. The report showed that total construction down in Australia fell for the fifth consecutive quarter, dragged down by new work failing to fill the void left by the completion of big resource projects.

On a seasonally adjusted basis, the Australian Bureau of Statistics figures shows the value of total construction fell 3.7 percent in the June quarter to $47.4 billion, a level not seen since June 2011, when the construction sector was just beginning to recover from an economic disaster.

The New Zealand Dollar traded nearly flat on Wednesday after posting a volatile but positive move on Tuesday following hawkish comments from Reserve Bank of New Zealand governor Graeme Wheeler. The NZD/USD last traded at .7283, down 0.0003 or -0.04%.

The USD/JPY is trading at 100.27. In the absence of fresh economic news out of Japan and ahead of Yellen’s speech on Friday, it looks as if traders are just trying to make a market in order to prevent the Forex pair from dropping substantially below the psychologically important 100.00 level.