U.S. Dollar Outperforms Ahead Of Powell Speech, Kiwi Slips After Orr Remarks

The U.S. dollar outperformed at the margin, with all eyes on the upcoming keynote speech from Fed Chair Powell at the central bank's annual economic forum in Jackson Hole. The BBDXY index firmed but held a tight range, with regional players parsing hawkish Fed comments doing the rounds on the eve of Powell's speech.

• USD/JPY added a handful of pips, as U.S. Tsy yields edged higher across the curve, and last trades at Y136.66. Note that $1.4bn worth of options with strikes at Y136.95-10 will roll off at today's NY cut.
• The yen showed limited, if any, reaction to a set of stronger than expected Tokyo CPI figures, a bellwether of national price dynamics. Core prices rose 2.9% Y/Y this month, beating the median estimate of 2.7%. The strong outturn is unlikely to affect the BoJ's thinking as the Policy Board deems the recent intensification in price pressures to be of cost-push nature.
• Growth proxies were generally weaker, with participants wary of taking up more risk ahead of the Powell speech. The kiwi dollar paced losses as Gov Orr suggested that the RBNZ's tightening campaign may soon start slowing amid signs of cooling consumption.
• The PBOC repeated a pushback against yuan depreciation, albeit with diminished resolve. The mid-point of permitted USD/CNY trading band was fixed 56 pips below the expected level, following a 120-pip miss on Thursday. USD/CNH bounced after a reaction dip and last trades ~90 pips better off.
• Today's economic calendar is heavily U.S.-centric, with Fed Chair Powell set to deliver his Jackson Hole speech. The final reading of Uni. of Mich. Sentiment, flash wholesale inventories as well as monthly personal income/spending figures will take focus on the data front.