The U.S. dollar fell 0.29 percent against a basket of currencies earlier this week. Investors are nervous in anticipation of Thursday’s speech by Jerome Powell, head of the US central bank.
The euro gained nearly half a percent against the dollar on Monday. While as of Monday morning the euro could be bought at $1.1835, it was already $1.1965 at the end of the trading day. This is the most since May 2018. Analysts see the rising jitters in the dollar market as they await what US Central Bank Governor Jerome Powell will announce on Thursday.
As it is known, it is not only the United States where they are struggling with too low inflation, and so far, extremely loose monetary policy does not seem to be increasing substantially. So investors expect Powell to announce an increase in the Fed’s inflation target from its current level of 2 percent a year. Estimates range from shifting its own target value to simply expanding the tolerance band, where its upper limit could reach up to four percent.
Too low inflation can cause purchases to be postponed, which in turn hampers household consumption spending, thereby hampering economic growth. At the same time, consumption is clearly the most important item for the US economy in terms of GDP spending, at a share of nearly 70 percent.