US dollar dips after Fed Chair Powell remarks

NEW YORK: The US dollar lost in late trading on Thursday, after Federal Reserve Chair Jerome Powell said the US central bank would be “proceeding carefully” on further interest rate hikes, reported Xinhua.

The dollar index, which measures the greenback against six major peers, fell 0.29 per cent to 106.2469 in late trading.

“Tight policy is putting downward pressure on economic activity and inflation,“ Powell said during a discussion at the Economic Club of New York on Thursday. “A range of uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little.”

He also indicated that soaring bond yields could help the Fed slow the economy, further cooling inflation and possibly signaling the end of rate hikes.

“Powell continued to leave optionality open for the Fed, in terms of future rate hikes, but did nothing to change the narrative that the Fed will keep rates unchanged at their next meeting and is relatively likely to keep them unchanged for the rest of this year as well,“ said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

US Treasury yield on the 2-year note which best reflects short-term interest rate expectations fell, while that on the 10-year note edged higher to 4.9215 per cent, near the 5 per cent level last seen in 2007.

“Is the 10-year going to breach 5 per cent in yield? … I think the answer to that is yes, that it can in turn provoke even more volatility,“ said Russell Hackmann, president of Hackmann Wealth Partners.

In late New York trading, the euro rose to US$1.0583 from US$1.0536 in the previous session, and the British pound grew to US$1.2145 from US$1.2144.

The US dollar bought 149.8360 Japanese yen, lower than 149.8980 Japanese yen of the previous session. The US dollar was down to 0.8933 Swiss francs from 0.8990 Swiss francs, and it rose to 1.3715 Canadian dollars from 1.3710 Canadian dollars. The US dollar slid to 10.9557 Swedish krona from 11.0259 Swedish krona. – Bernama