Currency Markets in Disarray? 'Traders' Divided After Powell's Speech!

<p>&nbsp;On Monday, the US dollar slipped from a 12-week peak as traders weighed the monetary options of the US and European central banks after catching signals from last week's Jackson Hole meeting. In addition, Beijing's decision to halve stamp duty on stock trading helped strengthen the euro.</p><p><br /></p><p>The US dollar index, which measures the US dollar against six major currencies, eased 0.08% to 104.08 after reaching its highest level since early June on Friday. The index rose more than 2% in August and is expected to snap a two-month losing streak.</p><p><br /></p><p>Fed Chairman Jerome Powell told the annual Jackson Hole Economic Policy Symposium that the central bank may need to raise interest rates further to finish the job of keeping inflation down.</p><p><br /></p><p>Markets expect an 80% chance the Fed will stay on course next month based on the CME FedWatch tool, but the probability of a 25 basis point hike in November is 51% compared to 33% a week earlier.</p><p><br /></p><p>A series of strong US economic data has helped ease fears of a recession. But with inflation still above the Fed's target, some investors fear the US central bank will keep interest rates high for longer.</p><p><br /></p><p>With the Fed stressing the importance of upcoming US economic data, investors' focus this week will be on the payrolls report, core inflation, and consumer spending.</p><p><br /></p><p>"If the unreported data is bad, then more tightening should be expected," said Rodrigo Catril, chief currency strategist at National Australia Bank.</p>