Dollar reverses slump as market plumbs murky Fed direction
NEW YORK: The dollar reversed its slump and headed higher in forex trade Friday as markets plumbed the murky direction of the Federal Reserve’s interest rate plans.
The dollar pulled up to 100.20 yen and $1.3080 against the pound, and pushed to $1.1324 against the euro.
There were still widespread doubts that the Fed could raise rates in its September meeting despite two central bank officials pointedly reminding of the possibility over the past week.
A week before US and foreign central bankers gather for the Fed’s annual symposium in Jackson Hole, Wyoming, the Fed clearly remains unsettled about the disjunction between the strong jobs market and persistently weak inflation.
With the US economy still growing slowly, San Francisco Fed chief John Williams recently suggested the Fed needs to consider increasing its inflation target, now at 2 percent, to help stimulate more spending and investment.
Fed Chair Janet Yellen could address that challenge at the Jackson.