USD Continues to Reign, Powell Becomes the Focus!

<p>&nbsp;Heading into the European session, the US dollar continued to gain support to trade at record highs amid market concerns over China's economy.</p><p><br /></p><p>Chinese authorities continued to try to save the yuan, which fell to a 9-month low, by setting a higher peg for the currency today.</p><p><br /></p><p>The problems of the world's second-largest economy are deepening, with real estate developer Evergrande seeking Chapter 15 bankruptcy protection in a New York court on Thursday.</p><p><br /></p><p>Beijing has so far refrained from rolling out massive stimulus even as most of its economic data points to continued weakness.</p><p><br /></p><p>This caused investors to turn to the US dollar as a hedge, which was also supported by expectations for continued tightening by the Federal Reserve (Fed) in the fight against US inflation.</p><p><br /></p><p>Risk-sensitive currencies, the Aussie and New Zealand dollars continued to weaken at 9-month lows against the greenback.</p><p><br /></p><p><br /></p><p>Meanwhile, the euro remains at its weakest level in two months, pressured by a much stronger US dollar.</p><p><br /></p><p>The pound eased back from earlier gains after being hit by a slumping UK retail sales reading in July.</p><p><br /></p><p>The Canadian dollar continued to suffer at a two-month low amid weaker crude oil trading.</p><p><br /></p><p>The yen, on the other hand, found some support to rise today, but remains on track for a second straight weekly loss this week.</p><p><br /></p><p>Investors are now focusing on Federal Reserve (Fed) Chairman Jerome Powell's speech in Jackson Hole next week (Friday, August 25).</p>