FOREX-Dollar near one-week low before Powell's Jackson Hole speech

* Most major FX currencies steady ahead of speech
* Offshore Chinese yuan hits highest level since January
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Olga Cotaga
LONDON, Aug 27 (Reuters) - The U.S. dollar remained near the
one-week low it reached earlier on Thursday, before a speech by
Federal Reserve Chairman Jerome Powell that's expected to signal
the central bank will tweak its policy framework to help push up
inflation.
Powell is scheduled to address the Fed's annual central
bankers' conference at 1330 GMT, usually held in Jackson Hole,
Wyoming, but being conducted virtually this year because of the
COVID-19 pandemic. The change is likely to mean that Fed will base its future
monetary policy on realised rather than projected inflation data
while explicitly accepting an overshoot in inflation. That means
that the Fed will leave interest rates at their current lows for
longer than in past crises, which in turn weakens the dollar.
If Powell fails to meet these expectations, "there is
potential for a correction" in euro/dollar, which rose as high
as $1.1966 last week after the minutes of the Fed's July meeting
revealed its doubts about introducing yield-curve control, said
Ester Reichelt, an analyst at Commerzbank.
"FX market participants therefore hope that Jackson Hole
will once again provide a little more clarity about the
immediate monetary policy outlook so that euro/dollar will find
some new momentum in one direction or the other after all," she
said.
The euro last traded at $1.1822 EUR=EBS , having risen to a
six-day high of $1.1850 earlier.
The dollar's index against six major currencies =USD stood
at 92.98, near its weakest this week and not far off the
two-year low of 92.12 it touched last week.
Since the start of the pandemic, the Fed has expanded its
balance sheet by as much as about $3 trillion, far more than the
European Central Bank and the Bank of Japan.
The dollar was steady against the Japanese yen at 106.02
JPY=EBS . A key focus for the yen is a news conference by Prime
Minister Shinzo Abe scheduled for Friday amid growing
speculation over his health. The yen is likely to gain should Abe resign. Aggressive
monetary easing with close cooperation between the government
and the central bank, dubbed Abenomics, has been one of his
trademark policies, traders said.
The British pound stood firm at $1.3215 GBP=D3 , having
gained nearly 8% in three months. The Australian dollar AUD=D3
was changing hands at $0.7243, up 0.1% on the day.
The Chinese yuan was at its strongest since January after
data showed a recovery in profits at China's industrial firms.
The offshore yuan stood at 6.8748 per dollar CNH=EBS , its
strongest since Jan. 21.
The market appeared to ignore the latest sign of rising
tension between the United States and China. The United States
on Wednesday blacklisted 24 Chinese companies and targeted
individuals over construction and military activity in the South
China Sea.