US dollar declines amid Fed Chair Powell’s speech

US dollar declines amid Fed Chair Powell’s speech
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Photo: ANI

New York: The US dollar index decreased against other major currencies as Wall Street digested comments from US Federal Reserve Chairman Jerome Powell.

In late New York trading on Friday, the euro was up to $1.1625 from $1.1536 in the previous session, and the British pound increased to $1.2847 from $1.2814 in the previous session, Xinhua. The Australian dollar climbed to $0.7324 from $0.7245, Xinhua news agency reported.

The US dollar bought 111.20 Japanese yen, lower than 111.29 Japanese yen of the previous session. The US dollar decreased to 0.9828 Swiss franc from 0.9862 Swiss franc, and it fell to 1.3028 Canadian dollars from 1.3093 Canadian dollars.

Powell reiterated on Friday that the central bank will stick to the strategy of gradual rate hikes to manage potential risks and support domestic economic recovery.

Speaking at an annual economic symposium in Jackson Hole, Wyoming, Powell said the central bank faces two major risks: “moving too fast and needlessly shortening the expansion, versus moving too slowly and risking a destabilizing overheating.”

“I see the current path of gradually raising interest rates as the FOMC’s approach to taking seriously both of these risks,” he said, referring to the Federal Open Market Committee (FOMC), the Fed’s policy-making committee.

While US inflation has recently moved up near 2 per cent, Powell said he sees “no clear sign of an acceleration above 2 per cent” and there does not seem to be “an elevated risk of overheating”.

Some analysts said Powell’s speech suggested the central bank may be approaching its neutral federal funds rate, which means the federal funds rate has reached an equilibrium where it neither stimulates nor suppresses economic growth.

On the economic front, US new orders for manufactured durable goods in July decreased $4.3 billion or 1.7 per cent to $246.9 billion, worse than market consensus, said the Commerce Department on Friday.

The dollar index, which measures the greenback against six major peers, fell 0.55 per cent at 95.1468 in late trading.