Dollar clinched the title of the week's best performing currency, even though there was just muted impact from Fed Chair Jerome Powell's remarks at Jackson Hole. While Powell's renewed commitment to combating inflation prompted traders to elevate their expectations for another rate hike within the year, broader market reactions, notably in equities and bonds, were rather subdued. Clearly, investors are taking a long view beyond the anticipated pause in September. On the other side of the pond, Sterling and Euro languished, standing out as the week's most notable underperformers. The disappointing set of services PMI data confirmed the slowing pace of economic activity in both UK and Eurozone. This data, coupled with the looming threat of a recession, poses a quandary for the BoE and ECB. Both institutions find themselves navigating the challenging task of reining in stubbornly high inflation without inadvertently triggering an economic downturn. Interestingly, amidst the broader European gloom, Swiss Franc emerged as a beacon of strength, clinching the position of the week's second strongest currency. Nevertheless, this strength was largely attributable to buying activity against both Euro and Sterling. Down under, Australia spearheaded the advance among the commodity currencies, though their gains were largely muted, with much of the global attention being fixated on developments in US and Europe. The shadow of uncertainty continues to loom large over China, with concerns about its economic recovery and vulnerabilities in its property and financial sectors potentially setting the stage for future turbulence, which would drag down the commodity currencies again. Lastly, Japanese Yen offered a mixed performance. While it appeared largely range-bound, there were subtle indications of growing bearish momentum when pitted against the resilient greenback. |