* 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. 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. 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
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
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