· The dollar hit a session low on Tuesday after comments on the economy from Federal Reserve Chairman Jerome Powell.
In prepared testimony released in advance of a hearing before the U.S. Senate Banking Committee, Powell said the Fed will remain "patient" in deciding on further interest rate hikes, reaffirming the policy shift made by the U.S. central bank in January.
This the first of Powell's two-day appearance before the U.S. Congress.
· "Powell wasn't more dovish than what we saw in January, but he's certainly less hawkish than he was last year," said Erik Nelson, currency strategist, at Wells Fargo Securities. "The thing is, the market has already priced in this seismic shift from the Fed toward a more neutral or more data-dependent stance."
· Money markets have ruled out any more rate hikes for the remainder of the year with an 80 percent probability of a rate cut by January 2020. The dollar overall also benefited from a jump in the U.S. consumer confidence index for February to 131.4, from a revised 121.7 reading in January.
· Jim O'Sullivan, chief U.S. economist at High Frequency Economics said the rebound in confidence was "likely helped by the end to the shutdown and the rebound in equities." "The report continues to signal a fairly healthy labor market," he added.
· In afternoon trading, the dollar index, a measure of its value against a basket of other currencies, fell 0.25 percent at 96.18.
· The dollar was slightly higher versus the euro at $1.1375, against the yen, however, the dollar was down 0.3 percent versus the yen at 110.73.
· Improving risk appetite was more evident in the British pound after media reports said Prime Minister Theresa May was considering delaying the March 29 deadline for the UK's exit from the European Union. "With political risk, if you can delay it or remove the prospect of a no-deal Brexit, it will always be met with optimism and a rally in the currency," said Wells Fargo's Nelson. The pound was last up 1.12 percent on the day at $1.342 .
· The U.S. economy remains strong, but dangers are brewing, Federal Reserve Chairman Jerome Powell told a Senate committee Tuesday.
In his semiannual testimony on the state of monetary policy, the central bank chief noted that the Fed is watching the state of affairs closely and is prepared to adapt policy if warranted. In all, he called the U.S. economic outlook "generally favorable" but one that faces challenges from abroad.
"While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals," Powell said in his prepared remarks to the Senate Committee on Banking, Housing and Urban Affairs. "Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year."
China and Europe are particular areas of concern, and the Fed is watching how Brexit negotiations and trade talks play out.
Powell rattled investors in December when he described the balance sheet roll-off as being on "autopilot," but his remarks Tuesday represented a different tack.
"I would note that we are prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments. In the longer run, the size of the balance sheet will be determined by the demand for Federal Reserve liabilities such as currency and bank reserves," he said.
· U.S. government debt yields fell Tuesday as investors digested Federal Reserve Chairman Jerome Powell's statement to the U.S. Senate.
At 10 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.645 percent, while the yield on the 30-year Treasury bond was also lower at 3.018 percent.
In a prepared statement, Fed ChairPowell told lawmakers that while the U.S. economy looks strong, there are some worrying signs on the horizon.
· In a stinging rebuke to President Donald Trump, the House of Representatives on Tuesday brushed aside veto threats and passed legislation to terminate the emergency he declared at the U.S.-Mexico border in order to build a wall there.
By a vote of 245-182, the House passed the resolution, setting up a vote in the Republican-controlled Senate where the resolution’s chances were slimmer, but seemed to be improving.
Overriding such a veto in Congress would require two-thirds majorities in both chambers, making it highly unlikely, said lawmakers.
· U.S. President Donald Trump and North Korean leader Kim Jong Un are meeting in Vietnam this week for the second time in less than a year, in a bid to get Pyongyang to give up its nuclear program in exchange for sanctions relief.
But experts say they don't have high expectations from this week's meeting, set to take place in Hanoi on Wednesday and Thursday.
"So far, North Korea seems only willing to take measures that limit its nuclear and missile capabilities, it has no indications that it wants to roll back or undercut its existing nuclear arsenal or missile arsenal," Tong Zhao, a fellow at the Carnegie-Tsinghua Center for Global Policy, told CNBC on Tuesday.
· Oil futures steadied on Tuesday on signs that OPEC plans to maintain production cuts despite pressure from U.S. President Donald Trump, whose comment criticizing rising crude prices sent the market into a tailspin a day earlier.
Prices slid on Monday, when many traders were out of the office attending International Petroleum Week, a series of industry events in London, after Trump called on OPEC to ease its efforts to boost the oil market. Prices were "getting too high," the president said.
An OPEC source told Reuters on Tuesday OPEC would stick to its agreement to tighten crude supplies regardless of Trump's recent tweet.
U.S. West Texas Intermediate crude ended Tuesday's session roughly flat, settling 2 cents higher at $55.50. WTI plunged more than 3 percent in the previous session.
Brent crude, the global benchmark, rose 45 cents, or just over a half percent, to $65.21 on Tuesday. Brent lost 3.5 percent on Monday.
Reference: CNBC, Reuters
Thai
Eng