Dollar rises ahead of Trump’s meeting with Zelenskiy- Currency Recap

[World Currency Rates]
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The U.S. dollar (DXY [https://seekingalpha.com/symbol/DXY]) rose higher on Monday ahead of Ukrainian President Volodymyr Zelenskiy’s meeting with President Donald Trump in Washington for peace talks, joined by German, British and French leaders.

The greenback was last up 0.21% at $98.06. Although Trump and Russian President Vladimir Putin ended a summit in Alaska without securing a ceasefire, the U.S. leader said he now expects Kyiv to move quickly toward a settlement.

DOLLAR WEEKLY MOVES AND KEY DRIVERS:

The U.S. Dollar Index (DXY [https://seekingalpha.com/symbol/DXY]), which measures the value of the dollar against a basket of six foreign currencies, dropped 0.65% over the last week.

After seeing a drop last week, the dollar edged higher on Monday after Ukraine's leader, Zelenskyy, on Saturday said he would see Trump on Monday and that he and European leaders supported a trilateral meeting [https://seekingalpha.com/news/4486346-defense-and-energy-in-focus-as-trump-pushes-ukraine-toward-peace-deal] between him, Trump, and Russian President Vladimir Putin.

Zelenskyy's comments came after Trump and Putin gathered in Alaska on Friday, a meeting that Trump described as "very productive," even though no agreement [https://seekingalpha.com/news/4486288-trump-says-putin-meeting-very-productive-but-no-deal-reached] was reached to resolve a war that has raged for nearly three and a half years.

Besides the Washington summit, investors will keep a close eye on the Jackson Hole Symposium scheduled to take place this week.

Federal Reserve Chair Jerome Powell will deliver his speech on Friday. The theme for the annual economic policy symposium this time is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”

All eyes will be on Powell as investors look for clues on whether he’s ready to signal the start of rate cuts or stick with a wait-and-see stance. Markets are now pricing in around an 85% chance the Fed would ease rates by a quarter point next month.

The speech also comes at a time when the Fed's independence and Powell's tenure have come into question under the Trump administration.

The U.S. 10-year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]) rose two basis points to 4.31% over the week. Meanwhile, the shorter-end, more rate-sensitive 2-year Treasury yield (US2Y [https://seekingalpha.com/symbol/US2Y#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]) dropped two points to 3.76%.

CURRENCY HIGHLIGHTS: MAJOR CURRENCY MOVEMENTS (AUGUST 11 TO AUGUST 17)

Euro (EUR:USD [https://seekingalpha.com/symbol/EUR:USD])

+0.17%

Pound Sterling (GBP:USD [https://seekingalpha.com/symbol/GBP:USD])

+0.92%

Japanese Yen (JPY:USD [https://seekingalpha.com/symbol/JPY:USD])

+0.59%

Chinese Yuan (CNY:USD [https://seekingalpha.com/symbol/CNY:USD])

+0.06%

Swiss Franc (CHF:USD [https://seekingalpha.com/symbol/CHF:USD])

+0.57%

Australian Dollar (AUD:USD [https://seekingalpha.com/symbol/AUD:USD])

+0.03%

Canadian Dollar (CAD:USD [https://seekingalpha.com/symbol/CAD:USD])

-0.24%

The euro (EUR:USD [https://seekingalpha.com/symbol/EUR:USD]) was reversing its gains on Monday, last down 0.24%, as investors worried about Zelenskiy’s meeting and potential outcomes for European geopolitics.

The British pound (GBP:USD [https://seekingalpha.com/symbol/GBP:USD]) was last down 0.03% as markets price further easing of 50bps from the Bank of England.

Meanwhile the Japanese yen (JPY:USD [https://seekingalpha.com/symbol/JPY:USD]) was last down 0.53% on Monday, with the Chinese yuan (CNY:USD [https://seekingalpha.com/symbol/CNY:USD]) last up 0.07%.

Market reactions and analysis:

According to Kit Juckes, foreign exchange strategist at Société Générale, the dollar is stuck in a holding pattern [https://seekingalpha.com/news/4486343-dollar-s-fate-hinges-on-u-s-growth-outlook-socgens-kit-juckes], with its next move dependent on how expectations for U.S. growth evolve in the coming weeks.

In a note to clients on Sunday, Juckes said the greenback continues to trade nervously in ranges, with markets torn between the U.S. administration’s push for a weaker currency and patchy economic data.

“Dollar bears have a not-so-secret weapon in the U.S. administration’s desire for a weaker dollar,” he wrote, reiterating SocGen’s call for the euro to rise above $1.20 next year, though not as high as $1.30.

The bank also calls for the yen to strengthen into the 130s against the dollar. Emerging-market currencies should also benefit, provided the United States avoids recession and Treasury yields remain stable, he added.

Dollar-Based ETFs: (UUP [https://seekingalpha.com/symbol/UUP]), (USDU [https://seekingalpha.com/symbol/USDU]), and (UDN [https://seekingalpha.com/symbol/UDN]).

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* Dollar’s fate hinges on U.S. growth outlook: SocGen's Kit Juckes [https://seekingalpha.com/news/4486343-dollar-s-fate-hinges-on-u-s-growth-outlook-socgens-kit-juckes]
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