The dollar index was little changed on the day on Wednesday before Federal Reserve Chairman Jerome Powell is due to speak, while sterling gained as investors positioned before the Bank of England’s release of its analysis of Britain’s exit from the European Union.
Powell’s speech at 12 p.m. EST (1700 GMT) will be evaluated for any new indications of caution as global growth slows and as the U.S. central bank comes under renewed criticism from President Donald Trump for raising interest rates.
The British government and the Bank of England are likely to step up their warnings on Wednesday of a hit to the economy from a no-deal Brexit, potentially helping Prime Minister Theresa May to tackle deep opposition to her plan.
The BoE will publish its assessment of the implications for interest rates and its oversight of the banking sector arising from different Brexit scenarios at 11:30 a.m. EST (1630 GMT).
“I think people are waiting for the Powell luncheon speech, as well as the Bank of England’s Brexit analysis,” said Win Thin, global head of currency strategy at Brown Brothers Harriman in New York.
The dollar had been under pressure in recent weeks on signs that the Fed might reduce the pace of rate increases amid slowing global growth, peak corporate earnings and the escalating trade tensions.
“How concerned the Fed sounds about the current economic slowdown will be seen as an indication as to how quickly a rate pause might come,” said Thu Lan Nguye, a currency strategist with Commerzbank in Frankfurt.
Investors also will focus on whether Powell addresses growing hostility from Trump, who said in a Washington Post interview on Tuesday he is “not even a little bit happy” with the Fed chairman and that the central bank’s policies are hurting the economy.
Minutes from the Fed’s Nov. 7-8 meeting, to be released on Thursday, will also be evaluated for further indications of how many more times the U.S. central bank is likely to hike interest rates.
Investors are also focused on the G20 summit in Buenos Aires on Friday and Saturday, where Trump and his Chinese counterpart, Xi Jinping, are scheduled to discuss contentious trade matters.
Trump said this week that it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs. That drove investors to safe-haven currencies such as the dollar.
