Dollar steadies ahead of Trump-Zelenskiy meet and Fed’s Jackson Hole signals

The US dollar held firm on Monday as traders balanced geopolitical risks with expectations for monetary policy ahead of a crucial week that includes a meeting between President Donald Trump and Ukrainian President Volodymyr Zelenskiy, alongside the Federal Reserve’s Jackson Hole symposium.

According to Reuters, currency movements were muted in early Asian trading, though the dollar regained some ground after last week’s slide. Against a basket of currencies, the greenback inched up to 97.85, having shed 0.4 per cent over the past week. The euro was little changed at $1.1705, while sterling ticked up 0.07 per cent to $1.3557. The dollar also rose 0.11 per cent against the yen to 147.34.

Trump-Zelenskiy meeting in focus

The main political event for markets on Monday is Trump’s meeting with Zelenskiy, joined by European leaders, as Washington pushes Kyiv to accept a rapid peace deal to end Europe’s deadliest war in eight decades.

This follows Trump’s talks with Russian President Vladimir Putin in Alaska, where the two leaders signalled alignment on prioritising a peace agreement over a ceasefire. As per Reuters, the US president is expected to press Ukraine’s leadership towards concessions that may accelerate negotiations, though such moves remain contentious among European allies.

Fed’s Jackson Hole symposium looms large

Investors are equally focused on the Kansas City Federal Reserve’s annual Jackson Hole symposium, scheduled for August 21-23. Fed Chair Jerome Powell is set to deliver remarks on the US economic outlook and the central bank’s policy framework, a speech closely watched for signals on the pace of interest rate cuts.

Markets are currently pricing in an 84 per cent chance of a quarter-point cut in September, down from 98 per cent a week ago. The shift came after stronger-than-expected data, including higher wholesale prices and robust July retail sales, dampened bets on a larger 50-basis-point reduction.

“While the data don’t all point in the same direction, the US economy looks to be in okay shape in the third quarter,” Comerica Bank chief economist Bill Adams told Reuters. He added that the Fed is likely to cut rates by year-end, either in September or later in the year.

Joseph Capurso, head of international and sustainable economics at the Commonwealth Bank of Australia, said Powell’s comments could test market expectations: “Given market pricing is very high for a rate cut in September, I think the risk is that Powell is hawkish, or is perceived to be hawkish, if he gives a balanced view of the US economy.”

Asian currencies find support

In Asia-Pacific trading, the Australian dollar rose 0.1 per cent to $0.65145, while the New Zealand dollar gained 0.15 per cent to $0.5934, both recovering slightly after losses last week. Japan’s yen remained under scrutiny after rare remarks from US Treasury Secretary Scott Bessent, who said the Bank of Japan was “behind the curve” on policy. Tokyo brushed aside the criticism, with Japan’s government reaffirming support for the central bank’s cautious stance.

With geopolitics and central bank policy converging, markets face a tense week where headlines from Alaska to Wyoming could set the tone for currencies worldwide.

(With inputs from the agencies)