Deutsche Bank: Jovosh suggests a new inflation target for the dollar will be under pressure

On Friday, 28 August, the United States dollar stood close to the main currency by a week's high, and investors were watching the Federal Reserve Chairman Walsh's forthcoming address at the Jackson Hole Global Central Bank annual meeting. As inflation in the United States continues to exceed the target of 2 per cent, traders are now valuing the Federal Reserve’s expected interest rate increase of at least once this year, with a range of 25 basis points, which also underpins the performance of the dollar in recent trading days. Markets generally wanted more information on monetary policy and initiatives by the United States Treasury Department to lower long-term financing costs, as the bond market had been more volatile in the recent past, from a speech by Walsh. However, the analysts felt that, given the continuing reluctance of Walsh to provide clear forward-looking guidance, he would be more likely to provide an update on the progress of the five special working groups on the operations of the Federal Reserve that he had established in his early years in office. Volkmar Baur, a foreign exchange and bulk commodity analyst at the German commercial bank, stated in his report that Walsh had repeatedly emphasized in recent weeks that the Fed’s inflation target of 2 per cent was unshakeable, but that he had never explicitly mentioned the PCE price index in that context. In his view, the Fed might at least be considering different inflation measures. He indicated that if Walsh released a similar signal, it could weaken the market ' s expectations of further interest rates and be interpreted by the market as a dove signal, so that the United States dollar could be under pressure. Kim Xian