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US dollar steady ahead of Yellen, Draghi

The US dollar hovered in a tight range on Friday against its peers, with investors awaiting remarks from the heads of the Federal Reserve and European Central Bank.

In sleepy summer trade, the dollar index was little changed. The buck was up 0.06 per cent against the yen to ¥109.61, while the British pound rose 0.16 per cent to $1.2820. The euro was flat at $1.1798.

Central bankers have gathered in Jackson Hole, Wyoming, for one of their biggest events of the year. Fed chief Janet Yellen is slated to speak at 8am local time (13.00BST). Investors are eager to see whether Ms Yellen will look to strengthen the case for a third 2017 rate increase, given the market odds have swooned on the back of soggy inflation data.

“Yellen may believe the markets need reminding that the Fed remains on course to raise the federal funds rate one further time this year. This would merely be a repeat of current Fed communication and hence is unlikely to prompt any major lift for the US dollar,” said Derek Halpenny at MUFG.

Mario Draghi, the ECB head, will follow-up later in the day with a luncheon address. Not too much is expected in the way of fireworks, though his words will be closely scrutinised for any hint on when the central bank may start to ease its bond-buying scheme. “While he will do his utmost to avoid sending the EUR higher, the fact is that the ECB will be normalising policy because the economy is doing well,” said Chris Turner of ING.