FOREX-Dollar gains after Fed shifts inflation target as expected

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Recasts with Powell comments, adds quotes, updates prices;
previous LONDON)
By Karen Brettell
NEW YORK, Aug 27 (Reuters) - The U.S. dollar gained on
Thursday in choppy trading after Federal Reserve Chairman Jerome
Powell said, as widely expected, that the U.S. central bank
would roll out an aggressive new strategy to lift U.S.
employment and inflation.
Under the new approach, the U.S. central bank will seek to
achieve inflation averaging 2% over time, offsetting below-2%
periods with higher inflation "for some time," and to ensure
employment does not fall short of its maximum level.
“The market expected most of this,” said Marc Chandler,
chief market strategist at Bannockburn Global Forex in New York.
There are doubts about whether the Fed will be able to lift
inflation, despite the new target.
“The Fed hasn't achieved its inflation targets since 2012,
and so now they're saying now we‘re serious about it ... don't
think that's what creates inflation, or really the inflation
expectations,” Chandler said.
The dollar index =USD initially sank on the announcement,
before rebounding to last be up 0.53% on the day at 93.31.
The euro EUR= fell 0.51% to $1.1769.
Longer-term, if the Fed is able to increase price pressures
but also leave rates near zero for longer, the policy would be
negative for the dollar.
“What's going to happen is when you have all the other
central banks starting to pull back their stimulus, starting to
show signs of tightening, the Fed is going to lag on that, said
Edward Moya, senior market analyst at OANDA in New York.
“You're going to see that interest rate differential not be
in the dollar's favor. It's just providing a longer-term bearish
outlook for the greenback,” Moya said.
Data on Thursday showed that the number of Americans filing
new claims for unemployment benefits hovered around 1 million
last week, suggesting the labor market recovery was stalling as
the COVID-19 pandemic drags on and financial aid from the
government dries up. The British pound GBP= reached an eight-month high of
$1.3283 against the greenback earlier on Thursday, before
falling back to $1.3170.
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Currency bid prices at 10:15AM (1415 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1769 $1.1829 -0.51% +4.99% +1.1900 +1.1763
Dollar/Yen JPY= 106.3200 105.9800 +0.32% -2.33% +106.4100 +105.6200
Euro/Yen EURJPY= 125.14 125.37 -0.18% +2.62% +125.7500 +125.1500
Dollar/Swiss CHF= 0.9119 0.9081 +0.42% -5.78% +0.9122 +0.9038
Sterling/Dollar GBP= 1.3170 1.3208 -0.29% -0.67% +1.3283 +1.3164
Dollar/Canadian CAD= 1.3152 1.3139 +0.10% +1.28% +1.3166 +1.3105
Australian/Doll AUD= 0.7221 0.7231 -0.14% +2.85% +0.7290 +0.7218
ar
Euro/Swiss EURCHF= 1.0732 1.0742 -0.09% -1.11% +1.0760 +1.0731
Euro/Sterling EURGBP= 0.8935 0.8954 -0.21% +5.69% +0.8965 +0.8930
NZ NZD= 0.6605 0.6619 -0.21% -1.94% +0.6674 +0.6605
Dollar/Dollar
Dollar/Norway NOK= 8.9655 8.8640 +1.15% +2.13% +8.9757 +8.8396
Euro/Norway EURNOK= 10.5540 10.5150 +0.37% +7.28% +10.5588 +10.4926
Dollar/Sweden SEK= 8.7604 8.7115 +0.03% -6.28% +8.7749 +8.6621
Euro/Sweden EURSEK= 10.3145 10.3116 +0.03% -1.48% +10.3290 +10.2973