The dollar was on the defensive on Wednesday, elbowed off a three-week peak by a reversal in U.S. yields as they headed south again ahead of a meeting of central bankers, at which the Federal Reserve is expected to give clues on further rate cuts.
Central bankers will gather at Jackson Hole, Wyoming, on Friday with markets focused on a scheduled speech by Fed Chair Jerome Powell.
His comments will take center stage especially after last week's inversion of the U.S. yield curve -widely regarded as a recession signal- boosted expectations for the Fed to lower interest rates at its September policy meeting. Faced with rising risks to the U.S. economy, the central bank in July cut rates for the first time since the financial crisis.
The dollar index (DXY) against a basket of six major currencies was flat at 98.210 after shedding 0.2% overnight.
The index had climbed to 98.450 on Tuesday, its highest since Aug. 1, as U.S. yields bounced back from multi-year lows at the week's start on signs global policymakers were ready to step up stimulus support to stave off a steep economic downturn.
U.S. yields, however, declined overnight on the prospect of more easing by the Fed.
Investors will also be looking for clues on the Fed's plans in minutes of its July policy meeting due later on Wednesday.
The dollar was little changed at 106.330 yen after shedding 0.4% the previous day, while the euro was steady at $1.1094, having put on 0.2% overnight.
Source : Reuters