Dollar slips after Powell beckons tapering, holds on rate hikes
The dollar slid on Friday after the market perceived a highly anticipated speech by Federal Reserve Chair Jerome Powell to be dovish, even as he indicated tapering the U.S. central bank’s massive support to the economy could start by year’s end.
Powell said there had been clear progress toward maximum employment and he was of the view that if the U.S. economy evolved broadly as anticipated, “it could be appropriate to start reducing the pace of asset purchases this year.”
But Powell told the Fed’s annual Jackson Hole symposium that the timing and pace of tapering should not be seen as a signal for when interest rates will begin to rise, a message the market perceived as being dovish as it will keep credit cheap.
The dollar index, which measures the greenback’s performance against a basket of six major currencies, fell 0.42% to 92.6540.
The euro rose 0.39% to $1.1797, while the yen rose 0.23% at $109.8200.
After minutes of the Fed’s policy-setting meeting in July were released last week, the dollar marched higher because most participants anticipated tapering to begin this year.
Reference: CNBC
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