The US dollar slipped on Friday after US Federal Reserve Chairman Jerome Powell said in a much-anticipated speech that the US central bank could start cutting its massive support for the economy by the end of the year. year, which was not as fast as many on the market. had assumed.
Powell said there had been clear progress towards maximum employment and he believed that if the US economy improved as expected, “it might be appropriate to start reducing the pace of asset purchases this year.” .
However, Powell told the Fed’s annual Jackson Hole symposium that the timing and pace of the cut should not be taken as a signal when interest rates will start to rise.
The speech showed that Powell had not taken the hawkish stance of some Fed officials, said Gregory Anderson, global head of foreign exchange strategy at BMO Capital Markets.
“It’s pretty clear that if you’re worried about the timing, which we’re announcing in September that we’re going to cut back from October 1, that’s not there in this speech,” Anderson said.
“It’s not as bad as feared based on the most extreme hawk,” he added.
The US dollar index, which measures the performance of the greenback against a basket of six major currencies, fell 0.41% to 92.68, down 0.87% from the previous week.
On Friday, the new Taiwan dollar appreciated against the US dollar, gaining NT $ 0.009 to close at NT $ 27.928, up 0.29% from NT $ 28.008 the week before.
The euro rose 0.37% to US $ 1.1794, while the yen fell 0.24% to US $ 109.8200.
After the release of the minutes of the Fed meeting last month, the US dollar rose as most market participants expected tapering to begin this year.
Powell was clear in loosening the tapering from the “rate lift,” or interest rate hike, said David Petrosinelli, chief executive of InspereX in New York. “He was very clear in demarcating that. “
The US dollar fell as market participants sharply lowered their expectations for the Fed’s long-term tightening path, said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.
The US dollar began to retreat about 15 minutes before Powell’s speech, after St Louis Fed Chairman James Bullard reiterated his hawkish view that the reduction should begin soon and end in the first quarter. next year.
Benchmark 10-year Treasury yields fell 3.4 basis points to trade at 1.3104%.
The New Zealand dollar fell slightly after Prime Minister Jacinda Ardern announced that a lockdown against COVID-19 in Auckland is expected to remain in place for another two weeks.
The Canadian dollar rose 0.56% to C $ 1.2612 against the US dollar.
CNA Supplementary Reports, with Editor-in-Chief
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