Dollar supported as spotlight falls on monetary policy

Last week on Friday, the Dollar rebounded against its peers, helped by fewer than-expected US initial jobless claims, which rose 2,000 to a seasonally adjusted 234,000 for the week ended August 19 and as some participants bought back the currency to square positions ahead of a meeting of Central Bankers in Jackson Hole, Wyoming.

While Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi were expected to stay on script in speeches later in the day, investors were hungry for any clues on further US rate rises, the timing of its balance sheet tapering and whether Europe is still looking to rein in stimulus.

Meanwhile, Fed funds futures implied that traders saw a 42% probability of the Fed raising interest rates at its December meeting, down from around 50% early in July.

Meanwhile, Oil prices jumped as the US petroleum industry prepared for potential output disruptions as Hurricane Harvey headed for the heart of the nation’s Oil industry in the Gulf of Mexico. The storm has rapidly intensified, spinning into potentially the biggest hurricane to hit the US mainland in 12 years and taking aim between Houston and Corpus Christi on the coast of Texas. Prices rose as production in the affected area shut down in preparation for the hurricane, and on expectations that closures could last if the storm causes extensive damage.

Investors took a breather from European Equity Funds after pouring $10bn into the asset class since early July. The outflows underline the cautious tone in markets ahead of a smattering of monetary policy decisions and economic releases over the next few weeks. Investors are also questioning if the resurgent Euro will dent European corporate profits and in turn weigh on equities.