TOKYO (Reuters) – The dollar edged higher versus the yen on Friday on expectations a pivotal speech by Federal Reserve Chairman Jerome Powell will reinforce that the U.S. central bank has not entered a prolonged monetary easing cycle.

The greenback hit another 11-year high versus the Chinese yuan CNY=CFXS on Friday, while the British pound retreated from a more than three-week high.

The New Zealand dollar was the bigger mover on the day, jumping from a three and-a-half-year low after the Pacific nation’s central bank chief said he was “pleased” with where interest rates were, hosing down expectations of more immediate rate cuts to follow this month’s aggressive easing.

Powell gives the highly-awaited speech later Friday at a meeting of central bankers in Jackson Hole. Doubts about further easing emerged after two Fed officials said they saw no reason to cut interest rates again without new signs of economic weakness.

Currency markets have in recent months been driven by global central banks’ shift to much more accommodative policy settings as economic demand slows and trade disputes intensify.

Expectations that the Fed will cut rates at its next meeting in September are still very high, according to interest rate futures, but the currency market is likely to react if the tone of Powell’s comments does not match these dovish expectations.

Besides the Jackson Hole meeting over the weekend, a Group of Seven summit in France from Saturday could also rattle currencies. The European Union hopes to ease tensions with the United States to avoid punitive tariffs on EU autos.

“The rates market is well ahead of the Fed in pricing in aggressive rate cuts, but Powell may not be as dovish as the market is pricing in,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“Powell will keep the option of rate cuts on the table, but won’t lean too strongly in that direction. This would be supportive for the dollar.”

The dollar ground higher to 106.59 yen JPY=EBS on Friday but was stuck firmly in its recent trading range. For the week, the greenback was on course for a 0.2% gain versus the yen.

The dollar index .DXY against a basket of six major currencies rose 0.2% to 98.344 and was headed for a second weekly gain.

In onshore trading in China, the yuan fell to 7.0961 per dollar, its weakest since March 2008. Offshore, the yuan CNH=D3 weakened to 7.0987.

Concern about China’s economy is growing because U.S. tariffs on roughly $150 billion of Chinese goods will take effect from Sept. 1, about half the value of imports that President Donald Trump had previously threatened duties on. Trump has now set a Dec. 15 deadline for imposing tariffs on the remainder of Chinese goods imported by the United States.

The British pound GBP=D3 fell 0.3% on Friday to $1.2230. Sterling was still on course for a second weekly gain, but uncertainty remains high over how Britain will complete its divorce from the European Union.

The New Zealand dollar NZD=D3 rose 0.4% to $0.6390, its biggest daily gain since Aug. 8, and jumped 0.5% to 68.09 yen NZDJPY=. Reserve Bank of New Zealand Governor Adrian Orr told Bloomberg TV he can afford to wait on monetary policy after stunning investors earlier this month with a sharp 50-basis-point rate cut.

Philadelphia Federal Reserve Bank President Patrick Harker and Kansas City Federal Reserve Bank President Esther George both said on Thursday they saw no immediate need to cut rates.

Powell is likely to acknowledge later Friday that fallout from the U.S.-China trade war may worsen a global economic slowdown and ultimately make more U.S. rate cuts necessary.

But he is expected also to try to ensure he is not seen as bowing before repeated attacks from Trump for not easing policy further.

Interest rate futures traders are pricing in a 91% probability of a rate cut at the Fed’s September meeting, according to the CME Group’s FedWatch tool. In July the Fed cut rates for the first time in a decade to 2.00%-2.25%.

The euro EUR=EBS held steady at $1.1070, on course for its second weekly decline against the greenback.

Transatlantic rifts are set to feature prominently when Trump arrives at the G7 summit in France to discuss differences over trade, Iran and climate change.

If Trump slaps tariffs on EU cars and car part imports, which he says pose a national security threat, it would pose a new risk to Europe’s economic outlook.

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