Dollar ends higher after Fed alters inflation target

The greenback went through a volatile session on Thursday as the annual Jackson Hole Symposium kicked off with a virtual version. Although dollar initially fell broadly after Federal Reserve Chairman Jerome Powell announced that the central bank would put in a strategy to lift inflation and employment, which was widely expected, usd quickly erased intra-day losses and rallied due to a sharp rise in U.S. Treasury yields to end the day slightly higher against its G5 peers.  
  
Reuters reported the Federal Open Market Committee (FOMC) on Thursday announced the unanimous approval of updates to its Statement on Longer-Run Goals and Monetary Policy Strategy, which articulates its approach to monetary policy and serves as the foundation for its policy actions. The updates reflect changes in the economy over the past decade and how policymakers are taking these changes into account in conducting monetary policy. The updated statement is also intended to enhance the transparency, accountability and effectiveness of monetary policy.   
  
Versus the Japanese yen, although dollar dropped to 105.81 shortly after Asian open, price found renewed buying and rose to 106.07 on Bank of Japan board member, Hitoshi Suzuki's dovish comments. The pair then ratcheted higher to 106.20 in Europe but only to fall sharply but briefly to session lows at 105.61 in New York morning following Federal Reserve Chairman J. Powell's comments. However, price then erased intra-day losses and rallied to 106.70 on rise in U.S. Treasury yields and equities before weakening to 106.54 on profit-taking.  
  
Reuters reported Japanese financial institutions may see credit costs balloon to levels hit during the global financial crisis if a second and third wave of coronavirus infections hammer the economy, Bank of Japan board member Hitoshi Suzuki said on Thursday.   
  
Although the single currency edged up to 1.1849 in Asian morning, price met renewed selling and fell to 1.1795 on usd's strength before briefly rising to a 1-week high at 1.1901 in New York morning on Fed Chairman J. Powell's comments at the Jackson Hole Symposium. However, the pair swiftly erased intra-day gains and tumbled to session lows at 1.1763 on usd's broad-based strength due to rally in U.S. Treasury yields and stocks. Later, euro staged a strong rebound to 1.1834 and then moved sideways.  
  
While the British pound rose from 1.3195 in Asian morning to 1.3229 in European morning on cross-buying in sterling, price then dropped to 1.3165 on broad-based recovery in usd. However, cable then jumped to an 8-month high at 1.3285 in New York morning following comments from Federal Reserve Chairman J. Powell but only to tumble to session lows of 1.3162. Later, price staged a strong rebound to 1.3233 before trading sideways.  
  
In other news, Reuters reported the White House must increase its $1 trillion offer for more federal coronavirus aid if it wants to ink a deal with Congress, U.S. House Speaker Nancy Pelosi said ahead of planned talks later on Thursday.   "They have to move" and "meet in the middle," she told reporters at a news conference, adding that Democrats, who already passed a $3.4 trillion measure and floated a compromise after the White House offered a $1 trillion proposal. "We're not budging."  
  
On the data front, Reuters reported U.S. initial claims for state unemployment benefits totaled a seasonally adjusted 1.006 million for the week ended Aug. 22, compared to 1.104 million in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 1.0 million applications in the latest week.   
  
Data to be released on Friday :  
  
Japan Tokyo core CPI,k Tokyo CPI, Germany GfK consumer sentiment import prices, France consumer spending, GDP, CPI (EU norm), CPI, producer prices, Swiss KOF indicator, Italy manufacturing business confidence, consumer confidence, producer prices, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, U.S. personal income, personal spending, core PCE price index, PCE price index, trade balance, wholesale inventories, Chicago PMI, University of Michigan sentiment, and Canada GDP, budget balance.