· The dollar fell on Friday after Federal Reserve Chair Jerome Powell said he sees little risk that inflation is poised to accelerate beyond the central bank’s target but that steady interest rate hikes are the best way to protect the U.S. economic recovery for now.
The dollar was also hit by moves by the People’s Bank of China to stabilize the yuan, which had been under broad pressure amid trade tensions between the United States and China.
The dollar index .DXY, which measures the greenback against a basket of six other major currencies, fell a quarter of a percent from its position at 10:00 a.m. EDT when Powell’s remarks were made public. It was last at95.145, down 0.64 percent.
· The dip in the dollar index following Powell's speech extended losses that began in the Asian session after the People's Bank of China took steps to stabilize the currency market. The onshore yuan strengthened by nearly1 percent against the dollar, last at 6.803 yuan CNY=.
China’s central bank said on Friday that it was adjusting its methodology for fixing the yuan’s daily midpoint, amid broad dollar strength and ongoing trade tensions between Washington and Beijing.
· Federal Reserve Chairman Jerome Powell on Friday defended the U.S. central bank’s push to raise interest rates as healthy for the economy and signaled more hikes were coming despite President Donald Trump’s criticism of higher borrowing costs.
The Federal Reserve’s steady interest rate hikes are the best way to protect the U.S. economic recovery and keep job growth as strong as possible and inflation under control, Fed Chair Jerome Powell said on Friday in a high-profile endorsement of the central bank’s current approach to policy.
· St. Louis Federal Reserve Bank President James Bullard on Friday raised new alarm bells over the U.S. central bank’s plan to keep raising interest rates, warning that even one more rate hike could set the stage for recession.
“The thing is, we would be deliberately inverting the yield curve, because we think our models are right and we think the market’s wrong,” Bullard said. “We don’t have to do that, we don’t have to walk the plank in this situation because inflation is not high, inflation expectations are not exploding.
“We can afford to wait and see and inflation does start to move up, well, we can move up,” he added.
· Washington is pressing the European Union to speed up trade negotiations launched after last month’s meeting between U.S. President Donald Trump and EU Commission President Jean-Claude Juncker, two German and a U.S. official said on Saturday.
Emily Haber, Germany’s ambassador to the United States, told reporters a working group formed after the Trump-Juncker meeting had convened for the first time this week, and U.S. officials were pressing “for very rapid results”.
She said EU officials would need a clear mandate to move beyond the current “scoping exercise” and a deal would need to be reached before European Parliament elections in May 2019.
· President Donald Trump said on Saturday that the United States could reach a “big Trade Agreement” with Mexico soon as the incoming Mexican trade negotiator signaled possible solutions to NAFTA energy rules and a contentious U.S. “sunset clause” demand.
· North Korea’s state-controlled newspaper on Sunday accused the United States of “double-dealing” and “hatching a criminal plot” against Pyongyang, after Washington abruptly canceled a visit by Secretary of State Mike Pompeo.
· Iran awaiting European guarantees on the sale of Iranian oil and banking relations, Foreign Minister Mohammad Javad Zarif said on Saturday, according to the Iranian Students’ News Agency.
· Oil prices gained more than 1 percent on Friday, ending a run of weekly declines on signs that Iran sanctions may limit global supply and that a trade war may not curb China’s appetite for U.S. crude.
Brent crude oil LCOc1 settled up $1.09 a barrel, or 1.5 percent, at $75.82 a barrel. U.S. crude CLc1 was up 89 cents, or 1.3 percent, at $68.72.
U.S. crude rose more than 4 percent on the week, after seven consecutive declines, and Brent rose 5.3 percent after three weeks of falling prices.
Reference: Reuters
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