· The dollar edged higher on Thursday after another politically-driven slide against the euro and yen the previous session, as investors shifted focus away from government tension in Washington to an upcoming global central bankers' gathering.
But the dollar's respite was expected to be temporary as investors awaited key speeches from Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi at the Jackson Hole Economic Policy Summit in Wyoming. Still, no new policy messages are expected from either official.
In late trading, the dollar rose 0.4 percent to 109.49 yen JPY= and 0.1 percent to 93.272 against a major currency basket .DXY. Any such remark from the Fed chair will likely boost the dollar, which on Thursday was flat versus the euro. The single euro zone currency was last at $1.1801 EUR=.
· Some analysts suggested that Yellen could surprise the market and give a harder signal about a possible rate hike at its December policy meeting or on the reduction of the Fed's balance sheet, which is expected to start next month.
· The dollar has dropped 14 percent against the euro this year, driven by a collapse in expectations for tax cuts and other pro-growth moves by the administration of U.S. President Donald Trump that has weakened the case for further rises in U.S. rates.
· "I am not expecting anything outside of what has been communicated," said Minh Trang, senior FX trader, at Silicon Valley Bank in Santa Clara, California.
"But the main conversation has been and would still be on the inflationary pressures or the lack thereof in the U.S. economy. This would be an ongoing dialog," he added.
· The ECB's Draghi, on the other hand, could talk down a recently surging euro, some analysts said, although Jane Foley, currency strategist at Rabobank, believes the euro's uptrend is far from over.
· U.S. House of Representatives Speaker Paul Ryan on Thursday rejected speculation that future tax legislation could include temporary tax cuts for businesses, saying macro-economic elements of tax reform including rates must be permanent.
· President Donald Trump picked a new fight on Thursday with his fellow Republicans, saying congressional leaders could have avoided a "mess" over raising the U.S. debt ceiling if they had taken his advice.
The Treasury Department has said the ceiling must be raised by Sept. 29. If not, the government would be unable to borrow more money or pay its bills, including its debt payments. That could hurt the United States' credit rating, cause financial turmoil, harm the U.S. economy and possibly trigger a recession.
· U.S. home resales unexpectedly fell in July to an 11-month low as a chronic shortage of properties boosted prices, the latest sign that the housing market recovery was slowing.
The National Association of Realtors said existing home sales fell 1.3 percent to a seasonally adjusted annual rate of 5.44 million units last month. That was the lowest level since August 2016. Sales rose 2.1 percent on a year-on-year basis.
· In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits increased 2,000 to a seasonally adjusted 234,000 for the week ended Aug. 19.
Claims have now been below 300,000, a threshold associated with a robust labor market, for 129 consecutive weeks. That is the longest such stretch since 1970, when the labor market was smaller.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 237,750 last week, the lowest level since May.
· U.S. crude prices fell 2 percent on Thursday as Hurricane Harvey, forecast to come ashore as a Category 3 hurricane as the strongest storm to hit the U.S. mainland in 12 years, threatened oil operations along the energy hub on the U.S. Gulf Coast.
U.S. crude futures CLc1 settled 98 cents lower at $47.43 a barrel and Brent crude LCOc1 ended down 53 cents a barrel, or 1 percent, at $52.04.
· Around 10 percent of the Gulf Coast region's approximately 9.75 million barrels per day of refining capacity was shut in, according to a Reuters estimate.
· Storm preparations, however, also shut in crude production, which was supportive.
Reference: Reuters
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